BMW to Launch New Sub-Brand for China to Comply with Government Regulations

BMW and its Chinese partner Brilliance Auto are reportedly setting up a new sub-brand for the domestic market. According to reports from Chinese media, vehicles sold under the new sub-brand will be based on the previous generation 3-Series’ platform.

The same reports also mention that the BMW-Brilliance joint venture has registered a new brand name called “Zhi Nuo”, which translates into English as “The Promise”. However, neither BMW nor Brilliance haven’t confirmed these reports.

But why would BMW want to create a sub-brand for China? Well, it doesn’t. It has to, as regulations are becoming stricter for foreign manufacturers in the world’s largest car market. For the last ten years or so, overseas automakers have been forced to collaborate with a local manufacturer (most of the time state-owned) in order to get permission to sell their cars there, with production facilities split 50/50 between the two parties.

If they refuse, the government would impose heavy tariffs making their cars impossible to sell in China. Now, the Chinese government is stepping up the game in order to make its own carmakers more competitive. China is pushing for the creation of sub-brands within the existing joint ventures because the sub-brands will be 100 percent Chinese and will have all the rights on intellectual property.

Nevertheless, the cat and mouse game continues, as foreign automakers are not so foolish to give the Chinese their latest technology. They are putting on the table older platforms in order to comply with the government’s requests and remain on the market. For BMW the situation is simple: if it sets up the sub-brand, it will be granted permission to build a new plant with Brilliance in Shenyang. Expect the new sub-brand to be launched at this year’s Shanghai Auto Show (April 21-29).

By Dan Mihalascu

Story References: China Car Times & MSN Auto

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