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1.633 billion acquisition of Brilliance Zhonghua, BMW's sole proprietorship in China is stable?

  • Last Update: 2022-08-29
  • Source: Internet
  • Author: User
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On August 31, it was reported that BMW will acquire the "Brilliance" auto brand under the Brilliance Group at a price of 1.
633 billion yuan


.


For this matter, in addition to being shocked, the outside world is more concerned about the ultimate purpose of BMW's acquisition of Brilliance Zhonghua?

Brilliance's frustration, BMW's generosity

In fact, Brilliance China has been frustrated for many years.
Although the products it launched were once "crazy" by the market, it could not make up for its market absence and losses in the past ten years


.


In order to get rid of this situation, in 2015, Brilliance Zhonghua once again aimed at the research and development of MPV products, and even used the production method of some components and BMW to restore the declining market situation, but once again failed, with monthly sales of less than 100 units


.


Therefore, in this process, BMW Brilliance's "generousness" to the entire Brilliance Group was revealed


.


In addition to being the profit cow of Brilliance Group, BMW is also helpful to Brilliance in other aspects


.


Winning Brilliance China, how will BMW's transformation go?

The generosity of Brilliance is not that BMW is a philanthropist


.


In the short term, if the joint venture partner fails or even goes bankrupt, it will definitely affect the operation of the joint venture company, and it is unrealistic for BMW to find another partner within this time period


.


As a result, BMW's contribution to Brilliance is also well-founded


.


From time to time, when Brilliance Group really went bankrupt, the acquisition of Brilliance Zhonghua was another way to maintain a stable cooperative relationship between the two parties, and it was also a once-in-a-lifetime opportunity for BMW to further expand its business in China
.

BMW's response to the acquisition was "We hope to support the reorganization of the Brilliance Group with practical actions and are committed to further expanding our business in Liaoning Province
.
We hope to use the existing production capacity of Brilliance Automobile Manufacturing Co.
, Ltd.

"

This means that this move may be a good preparation for BMW to build a wholly-owned factory in China
.
It is worth mentioning that a person familiar with the matter has revealed that BMW China's 1.
633 billion yuan purchase price includes a premium of 400 million yuan, which is the price paid for vehicle production qualifications

.
This means that BMW has obtained the qualification for manufacturing in China in advance

.

In addition, BMW's acquisition of Brilliance China, strictly speaking, is the acquisition of Brilliance China's assets, not the brand
.
This also means that what BMW obtains is mainly the means of production to expand production capacity

.

BMW, which has complete qualifications, production lines and equipment, has the conditions to establish a wholly-owned factory in China
.

China has always been the most important part of BMW's global market.
If this step comes true, what changes might BMW's strategy and market planning in China have?

As early as 2018, BMW raised its stake in BMW Brilliance to 75%, becoming the first luxury brand to increase its shareholding in China.
The year before the official opening of the shareholding ratio, BMW acquired Brilliance Zhonghua, which triggered the external The conjecture of building a wholly-owned factory in China in 2022

.

In this regard, some industry experts said that this possibility is very high, and it is likely to become its future operation pillar
.

This is not groundless.
Although, as early as 2018, BMW established a joint venture company Spotlight Motors with Great Wall Motors with a 50%:50% share ratio.
However, after three years of establishment, no new products were launched.
forget

.
There are even media reports that the initial construction of the 160,000 vehicle capacity of the Spotlight Automobile production base project is not the previously planned new energy electric vehicle products, but all of them are given to the high-end brand WEY of Great Wall

.
It can be seen that BMW has not had a strong voice in the past

.

From a financial point of view, BMW has bought production equipment related to the Brilliance China brand.
Since many Brilliance production lines were almost similar to BMW standards, BMW can quickly put into production without large-scale transformation

.
And this part of the extra income can be used for the recovery of the remaining 25% of the equity, and there is no need to plan funds from the group headquarters.
This is an important financial relief for BMW in transition.
Therefore, compared to Spotlight, BMW's business in Shenyang Must be the top priority

.

Regarding the future direction of BMW's wholly-owned plant, the industry expert said that after BMW's acquisition of Brilliance China, the scale will inevitably expand
.
Referring to a series of price changes after Tesla built its factory in China, the improvement of BMW's localization is conducive to reducing the transaction price

.
BMW is likely to take this advantage to snipe its two other rivals, Mercedes-Benz and Audi, in order to consolidate its position in the Chinese market

.

For the entire global market, China may become an important production base for BMW
.
At present, the BMW iX3 has been produced in the Tiexi plant and exported to the world

.
And as the cost of its scale amortization is further reduced, China is likely to serve as BMW's global production base to deliver more BMW products to other overseas markets and even sell them back to Europe

.
Gain more market share in the world through low-cost price advantage, in order to achieve the ultimate goal of its successful transformation

.

Those who quit the game are sad, and those who are in the game are not easy.
This is the cruelty of competition

.



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