BMW Gets Approval for Car-manufacturing Venture in China

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Last updated at: (Beijing Time) Friday, June 21, 2002

BMW Gets Approval for Car-manufacturing Venture in China

Bayerische Motoren Werke AG has received the Chinese government's approval to set up a car-manufacturing joint venture in China , sources said on Thursday.

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Bayerische Motoren Werke AG has received the Chinese government's approval to set up a car-manufacturing joint venture in China , sources said on Thursday.

The German car manufacturer, better known as BMW, began talks with minibus maker Brilliance China Automotive Holdings Ltd. in late 2000, to jointly manufacture BMW luxury cars.

If successful, BMW will become the first foreign luxury car maker to produce automobiles in the China.

Two analysts said that executives from BMW's Beijing office said the car maker has received a project proposal permit from the Chinese government for their plan to produce "Made in China " BMWs for sale on the mainland.

"The project proposal permit is the first and the most difficult permit to get, said one analyst.

The project proposal permit allows BMW and Brilliance China to set up a joint venture.

BMW still has to get a feasibility study permit, a contract permit and a production permit before actual production can begin, said the analyst.

BMW wasn't immediately able to comment, said its regional corporate affairs manager. Brilliance China couldn't immediately be reached for comment.

Analysts said they were told by Brilliance China 's management Wednesday that BMW expects to control a 50% stake in the joint venture. Brilliance China will take a 40% stake and the remaining stake will be held by the government.

The minibus maker's management also said the company expects to receive a production permit by the end of this year and hopes to start production in the fourth quarter of 2003.

The joint venture would produce a few thousand BMW 3 series vehicles initially. Production would rise to 16,000 in 2004 when it starts to manufacture BMW 5 series vehicles.

The initial production capacity is 20,000 units annually and it hopes to expand to 40,000 units.

Analysts said the news is generally positive for Brilliance China , which has seen its share price fall nearly 17% in June.

The company had announced Thursdayday that its former chairman Yang Rong was replaced by its vice chairman and Chief Financial Officer Wu Xiao, while Su Qiang is the new president and chief executive. He Tao was named chief financial officer.

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