BMW’s Brilliance China partner considers selling JV stake: sources

BRILLIANCE China Automotive Holdings’ biggest shareholder is considering options to raise funds including selling the company’s 25 per cent stake in its joint venture (JV) with BMW, according to sources familiar with the matter.

Several Chinese carmakers including China FAW Group have been involved in preliminary talks about the stake in BMW Brilliance Automotive, the sources said, asking not to be identified because the deliberations are private.

Talks are ongoing, no final decision has been made and there may not be a transaction, the sources said.

BMW Brilliance is Hong Kong-listed Brilliance China’s most valuable asset, essentially accounting for all of its net income. BMW spent 3.6 billion euros (S$5.3 billion) in 2022 to lift its stake in the joint venture to 75 per cent from 50 per cent.

Brilliance auto restructuring

Brilliance China’s parent Brilliance Auto Group Holdings is undergoing a restructuring after defaulting on debt payments in 2020. Regulators also fined the company millions of yuan for a range of violations, including fabrication of earnings reports. A plan approved last year will see the government of Shenyang, the northeast Chinese city where the group is based, take over and repay Brilliance Auto’s creditors 16.4 billion yuan (S$3.1 billion) in instalments.

Officials from the Shenyang government, which will have a 29.99 per cent stake in Brilliance China when the restructuring is completed, said they were not aware of the potential sale of the joint venture holding. Brilliance China and FAW representatives did not respond to requests for comment, while BMW declined to comment.

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Brilliance China’s shares rose as much as 3.6 per cent on Monday (Jan 15) morning in Hong Kong, building on last week’s 7.5 per cent gain. They were little changed in 2023 after sliding the previous year following a trading suspension.

The joint venture

Established in 2003, the BMW Brilliance venture has two factories in Shenyang, a research and development centre and a powertrain plant, making it BMW’s biggest producer. The German automaker said on Tuesday that its sales in China, the world’s biggest car market, rose 4.2 per cent in 2023 to nearly 825,000 vehicles.

BMW Brilliance plans to invest 10 billion yuan in a battery assembly plant and will also begin producing Neue Klasse electric vehicles (EVs) in Shenyang from 2026, Bloomberg News reported in May. The China venture currently makes seven model ranges – fully electric, plug-in hybrid and internal combustion EVs – with an annual production capacity of 830,000 units, according to BMW. BLOOMBERG