BMW has extended its joint venture with Brilliance China Automotive Holdings until 2028, which could help the carmakers expand further in the largest auto market in the world. BMW has been collaborating with Brilliance since 2003. BMW also builds the X1 off-roader and the long-wheelbase versions of its 3-series and 5-series models in factories operated by their joint venture BMW Brilliance Automotive in China.
Analysts at ISI Group said in a note that a strong partner and long-term visibility is important for BMW to safeguard its position in the country. The China auto market surged 15.7 percent in 2013 to 17.9 million passenger vehicles, according to the China Association of Automobile Manufacturers.
BMW targets to sell 2 million vehicles this year. It sold a record 1.96 million cars in 2013, 20 percent of which were delivered in China. BMW is bent on expanding its operations in China as it bids to reduce its reliance on Europe, which has remained sluggish despite some indications of recovery.
BMW Group posted a 19.7-percent jump in sales in China in 2013 to 390,713 Mini- and BMW-branded cars. BMW recently placed yuan-denominated asset-backed securities, which should help fund expansion in local currency.
BMW’s main rival, Daimler, restructured in 2013 its joint venture with BAIC Motor to better control its sales and distribution network in China. While carmakers from Europe and the United States want to further penetrate into China, they have been restricted by a 50-percent ownership cap in joint venture units with Chinese state-owned companies.