BMW’s Brilliance China partner considers selling JV stake, say sources

BLOOMBERG

Owners of BMW AG’s carmaking partner in China are considering options to raise funds, including selling the company’s stake in its joint venture with the German manufacturer, according to people familiar with the matter.
Preliminary talks regarding Brilliance China Automotive Holdings Ltd’s 25% stake in its joint venture with BMW are ongoing, no final decision has been made and there may not be a transaction, the people said. Other carmakers involved in the deliberations include China FAW Group Co.
The joint venture with BMW is Hong Kong-listed Brilliance China’s most valuable asset, accounting for almost all of its net income. BMW spent €3.6 billion ($3.9 billion) in 2022 to lift its stake in the joint venture to 75% from 50%, after the Chinese government removed foreign ownership limits.
Brilliance China’s parent, Brilliance Auto Group Holdings Co, 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 ($2.3 billion) in installments.
Officials from the Shenyang government, which will have a 29.99% stake in Brilliance China when the restructuring is completed, said they weren’t aware of the potential sale. Brilliance China and FAW representatives didn’t respond to requests for comment, while BMW declined to comment.
Brilliance China’s shares rose 4.5% to their highest close since February 3. BMW shares slipped as much as 1% in Frankfurt.
The BMW Brilliance Automotive Ltd joint venture has two factories in Shenyang, a research and development center and a powertrain plant.
The German automaker said last week that its sales in China, the world’s biggest car market, rose 4.2% last year to 824,932 vehicles, almost a third of its total.
BMW Brilliance plans to invest 10 billion yuan in a battery assembly plant and will also begin producing next-generation Neue Klasse electric vehicles in Shenyang from 2026, Bloomberg News reported in May. The China venture currently makes seven model ranges with annual production capacity of 830,000 units, according to BMW.