Brilliance China Automotive’s largest shareholder is exploring various avenues to raise funds, with considerations including the potential sale of its 25% stake in the joint venture with BMW, according to sources familiar with the matter. The news led to a 4.5% increase in Brilliance China Automotive shares, as other automakers express interest in acquiring the stake.
Preliminary discussions involving several Chinese carmakers, including China FAW, have taken place regarding the stake in BMW Brilliance Automotive, insiders revealed. The ongoing talks have not resulted in a final decision, and the possibility of a transaction remains uncertain, emphasizing the private nature of the deliberations.
BMW Brilliance represents Brilliance China’s most valuable asset, constituting its entire net income. In 2022, BMW invested EUR3.6 billion (HK$30.8 billion) to increase its stake in the joint venture from 50% to 75%. The move by Brilliance China’s parent company, Brilliance Auto Group Holdings, to restructure follows defaults on debt payments in 2020, coupled with regulatory fines for various violations, including the fabrication of earnings reports. Under an approved plan, the government of Shenyang, the Chinese city of Brilliance’s headquarters, will take over and repay Brilliance Auto’s creditors 16.4 billion yuan (HK$17.96 billion) in installments, securing a 29.99% stake in Brilliance China upon completion.
Government officials from Shenyang expressed unawareness of the potential sale of the joint venture holding, while representatives from Brilliance China, FAW, and BMW declined to comment.
In a separate development, Chinese electric vehicle maker Li Auto (2015) reportedly implemented price cuts of up to 38,000 yuan for certain models, joining a new round of price wars ahead of the Chinese New Year holiday. Li Auto attributed the reductions to increased competition with foreign luxury brands such as Benz, BMW, and Audi, and anticipates that time-limited offers will aid the company during the model transition. The news led to declines in Li Auto’s shares by 4.3%, while XPeng (9868) and Nio (9866) also experienced decreases of 9.2% and 2.8%, respectively.
