BMW looks to Great Wall to expand Chinese production

Stock fell 2.1% yesterday amid speculation BMW considering separate, domestic JV with Great Wall Motor.

A BMW executive familiar with the matter told Reuters the report was "generally true".

Cars produced under the BMW and Great Wall deal will be built in the city of Changshu in the east, and a source close to the subject said only EVs would be produced there. According to Reuters, the company's sales in China grew by 11.3 per cent previous year.

BMW is China's second-largest premium brand, behind Audi.

China wants electric and hybrid cars to make up at least a fifth of the country's auto sales by 2025 and plans to loosen joint-venture regulations to achieve its aim.

"Based on the successful co-operation so far, the BMW Group and Brilliance China Automotive Holdings Ltd decided in June 2014 to extend the contract for their Chinese joint venture BMW Brilliance Automotive early". "We see a strong product cycle for Brilliance-BMW in the coming 3 years", Goldman Sachs analysts led by Yipeng Yang say in a note.

Trading would be suspended pending clarification of press articles, the company said.

A Great Wall official declined to comment.

It's also reported that Great Wall recently secured a deal for supplies of lithium, a key mineral in the production of battery packs in electric vehicles.

The firm's shares soared as much as 19.2 percent to their highest level in over two years, before paring some gains to stand up 14 percent in afternoon trade. Additionally, rumours regarding Great Wall's interest in the Jeep brand have been circulating of late - though parent company Fiat Chrysler Automobiles (FCA) has already played down that idea.

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