BMW in talks to manufacture Mini in China

BMW is in talks to create a Chinese joint venture in a bid to expand the Mini brand into the world’s biggest and fastest growing car market.

The talks with Great Wall Motor, China’s seventh largest carmaker and biggest producer of sport utility vehicles, will not affect jobs in the UK, said a person familiar with the situation.

The venture would be focused on manufacturing an electric version of the Mini in China as part of an effort to meet the country’s regulations encouraging electric vehicle production, set to go into effect in 2019, the person added.

The deal is not about “outsourcing” production or reducing capacity of Mini’s production site in Oxford, nor is it related to Brexit. “We are talking about additional growth, not outsourcing,” the person said.

“If you look at Mini, it’s British in terms of origin but it has further potential to grow. That growth can’t just come from Oxford.”

If a deal is struck, the Minis would be the first to be manufactured outside Europe.

Shares in Great Wall shot up on Wednesday, leading to their suspension on Thursday, as investors speculated on the prospects of the deal.

Great Wall, founded by billionaire chairman Wei Jianjun, said it will soon clarify press reports about the deal and resume trading of the company’s shares.

BMW declined to comment.

Nearly 50 per cent of BMWs sold around the world are produced outside Germany, as the company pursues a localisation strategy to build cars where they are purchased.

The joint venture agreement will be similar to other such deals signed this year to produce new energy vehicles in China, all aimed at satisfying Chinese regulators.

In May, Volkswagen and Chinese carmaker JAC received permission to go ahead with a joint venture to make battery cars.

Daimler, Ford, General Motors and the Renault-Nissan Alliance also announced similar joint ventures.

BMW currently makes cars with joint venture partner Brilliance China Automotive based in Shenyang. That contract, extended in June 2014, is valid until 2028 and BMW said it “will carry on to invest and develop this joint venture”.

According to Chinese law, foreign companies may only produce cars in China in conjunction with a Chinese local partner.

The Mini was designed in the 1950s and became one of Britain’s most popular cars. Now owned by BMW, it is mostly produced in the UK, but in 2014 it expanded production to the Netherlands.

Earlier this year, BMW chose Oxford instead of the Netherlands or Germany for upcoming production of the electric Mini, following months of lobbying from the UK government.

Global car companies have been coming to terms with new regulations in China designed to speed up the shift away from combustion engines and towards electric vehicles. New rules require traditional carmakers to offset combustion engine cars produced with annually rising amounts of credits, which they can earn by making electric vehicles or by buying credits from electric vehicle makers.

BMW has outlined plans for at least 12 fully electric cars by 2025.

Let's block ads! (Why?)