BMW plant flag in Chinese market
Having already established a stake in the Chinese market through a joint venture with Brilliance Automotive, car making giant BMW is now looking to take control of the deal by investing around £3.14bn into future plans.
China has become the largest market for new vehicles over the last decade, as disposable wealth continues to become more prevalent. Until recently, China had very few cars with most family’s using bicycles and scooters issued by the state. With more locals looking to take advantage of western products, demand for European cars continues to grow.
This decision by BMW has been made as a result of China announcing plans to relax tight rules previously placed on foreign car companies operating in the country. BMW can only own up to 50% of a joint venture in China, but by 2022 this stipulation will come to an end. The deal, which will be subject to regulatory and shareholder approval, will see BMW increase its output to over 650,000 vehicles.
The new deal will also include a £2.62bn investment into production facilities, which will be tooled to manufacture more electric vehicles. China is pushing for 20% of all new cars sold to be either electric or hybrid by 2025, placing the incentive on brands to make the switch sooner rather than later.
Along with the BMW range, Mini, who form part of the BMW group will also start production in China. BMW's chairman Harald Krüger has stressed the importance of establishing strong roots in the Chinese market, and given the opportunity relaxed rules could offer to European car makers this may be the first of many new announcements.