BMW, Great Wall Motor to produce Mini cars in China

German carmaker BMW AG is to produce electric Mini cars in a joint venture with China's leading SUV maker Great Wall Motor, to tap the potential of the world's largest market for electromobility.

The two parties signed a letter of intent on Friday in Beijing, said Great Wall Motor in a filing to the Hong Kong stock exchange.

BMW said in a statement that they will soon discuss the details of a possible joint venture, and clarify aspects such as the choice of production location and concrete investments.

But BMW said it has no plans to set up an additional sales organization in China.

The German carmaker has been localizing BMW-branded models in partnership with Brilliance Auto, while Great Wall Motor is among the few Chinese automakers to not have an international carmaking partner.

Analysts said it is understandable that BMW is seeking a new partner in a competitive market like China, as Brilliance is only a financial investor in the joint venture, contributing little to BMW's success in the country.

They said the move will also help Great Wall Motor to meet the demand of the Chinese government that each carmaker in the country must produce a certain quota of electrified cars starting this year.

BMW's current Chinese joint venture, BMW Brilliance Automotive, has two car-manufacturing plants and an engine plant, which includes a battery factory for electrified BMW-branded vehicles.

This is the first battery factory to be operated by a premium automobile manufacturer in China.

BMW said, "The successful strategy for expansion of the BMW Group’s global production network obeys a clear rule: Production follows the market."

Around 560,000 BMW-branded vehicles were delivered to customers in China in 2017 – more than in the next two largest markets, the United States and Germany, combined.

In 2017, China was Mini’s fourth-largest market, with around 35,000 cars delivered.

The first electric Mini cars will be produced in the United Kingdom starting in 2019 before they will be localized in China.