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BMW to take control of China venture in first for foreign maker

Beijing plans to phase out investment restrictions

BMW is set to become the first foreign automaker to take a more than 50% stake in a Chinese joint venture as the country moves to scrap long-held restrictions on investment.   © AP

FRANKFURT, Germany/BEIJING -- BMW is expected to become the first foreign automaker in China to take a majority stake in a joint venture as Beijing moves to lift investment restrictions.

Foreign automakers have been required to do business in China through joint ventures with local partners, with their stakes capped at 50%. The Chinese government said in April that it would lift that cap for passenger car manufacturing in 2022.

BMW is in talks with its venture partner, Brilliance Auto Group, about the pair's growth strategy for China, including what size stake the German automaker will hold, a source close to the matter confirmed Thursday.

China said in a report on Premier Li Keqiang's recent trip to Germany that BMW would raise its stake above the current 50%, noting the move as a historic first. Germany's Manager Magazin reported that the automaker will take a stake of at least 75%.

BMW and Brilliance agreed Monday, during Li's visit, to increase the production capacity of BMW Brilliance Automotive to 520,000 vehicles annually from 450,000 now, and to manufacture the all-electric BMW iX3 in China for export worldwide starting in 2020. They are thought to have discussed increasing BMW's stake at that time.

But agreement on that matter could be slow in coming. It is unclear whether Beijing intends to make an exception to its liberalization plans by letting BMW raise its stake before 2022. If an exception is granted, other global automakers including Volkswagen and General Motors would likely seek similar treatment.

The investment cap for new-energy vehicles -- a designation including fully electric vehicles and plug-in hybrids -- is to end this year, and that on commercial vehicles such as trucks will be lifted in 2020. American electric car maker Tesla announced earlier this week that it will build a massive factory in Shanghai, operating without a local partner under the new rules.

BMW Brilliance Auto produced and sold 380,000 BMWs in China last year, accounting for roughly two-thirds of BMW's sales in the country. BMW is neck-and-neck with compatriots Audi and Mercedes-Benz for supremacy in China's luxury car market, with each brand selling around 600,000 vehicles there last year including imports.

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