SHENYANG, China (Reuters) - German luxury carmaker BMW will take majority control of its main China joint venture, BMW Brilliance Automotive, the first such move by a foreign carmaker as Beijing sets to relax ownership rules on foreign auto ventures in the market.
BMW will pay 3.6 billion euros ($4.2 billion) to raise its stake in the joint venture to 75 percent from the current 50 percent, the carmaker said in a statement. The deal will close in 2022 when rules capping foreign ownership are lifted.
The move should allow the carmaker to boost its profits in the world's top auto market and bolster a push to shift more production to the country amid a whipsawing trade war between China and the United States that has raised the cost of imports.
Beijing is looking to lure global carmaker to invest in China. It will relax a long-standing restriction capping foreign ownership of China auto businesses at 50 percent for new-energy vehicles this year and all auto ventures by 2022.
The rule changes already helped Tesla Inc to gain Beijing's approval for a wholly-owned China manufacturing and sales company in Shanghai. That marked the first time a foreign carmaker established a full presence in China without a partner.
BMW said in a statement the aim of the move was to help increase production capacity at its existing manufacturing sites in the northeastern city of Shenyang and "expand the localisation of additional models including new energy vehicles".
The term of the joint venture is to be extended to 2040 from 2028, the German automaker said.
($1 = 0.8673 euro)
(Reporting by Norihiko Shirouzu in Shenyang and Gaurika Juneja in Bengaluru; Writing by Adam Jourdan; Editing by Stephen Coates)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)