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BMW to outsource China mini auto making to Great Wall

13 October 2017

Chinese law requires worldwide brands to partner with a domestic manufacturer to produce vehicles for the market.

The stock jumped 14% on Wednesday after www.iautodaily.com, a Chinese website, reported Great Wall and BMW would set up a joint venture in China and were selecting a venue to build a manufacturing plant. Spokespeople from BMW and Great Wall declined to comment on the matter, with the latter saying that the company will issue a statement later. The prospective deal focuses specifically on electric vehicles, according to sources familiar with the matter. That strategy helped propel the company to a 26 percent sales surge previous year.

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"China has made it clear that basically it will not approve of new gasoline-car partnerships". 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 the target.

Brilliance China Automotive Holdings, which makes cars in a venture with BMW, rebounded 4.9% at 10.01am in Hong Kong after falling 2.1% on Wednesday. Sergio Marchionne, CEO of FCA said his company won't consider selling Jeep as a separate entity and rejected the idea of making a deal with Chinese rival Great Wall Motor Co, reports Bloomberg.

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Brokerage Jefferies said in a note that it was "understandable that BMW needs a new partner to defend its market share in a more competitive market", and expected that the move would hit current partner Brilliance.

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