Hot! BMW AG: What's Next
- Thread starter mini_cooper4
- Start date
It's not explicit, but perhaps they took that from the following statement given by Zipse.
"Our new cluster architecture is geared towards electric drive trains. This area reports directly to me. It is organisationally connected to all divisions – from markets, finance, procurement, development and production, all the way to sales and marketing. This gives us greater leverage and makes us much faster – also in our cooperation with partners. The objective is for the new architecture to create an overall optimum. Our new plant in Hungary will play a key role in this, ramping up the new BEV-centric architecture from the middle of the decade"
Based largely on the investor presentations, my personal interpretation is that iX1, i4, i5 and i7 will arrive on the existing 'Power of Choice' four way architecture, and are due 2023-2025 (this is after Leipzig, Regensburg, Munich and Dingolfing complete their upgrades in 2022). Whatever new developments follow those models (i.e. from 2026), would use the "BEV-centric" platform mentioned and referred to by the Spanish press. It's odd that Zipse said the Hungarian plant plays a key role, but I'm not sure if it's clear what their output will be.
What I'm really not clear on, is how iNext fits in, what it's based on, and if the the "BEV-centric" architecture is still based on the current 4 way one, of is totally new.
Is this Jeopardy? Is the answer "How might you refer to sea vessel that uses Azipods for maneuvering?"
David Brent
Autobahn Adventurer
CrunchSlaughtered
RPM Ruler
So BMW has another hurdle to solve. Its main joint-partner in China - Brilliance has solvency problems. Interesting how this will develop.
I'm not up to speed on the current rules in China regarding this whole 'foreign companies must partner with state companies to do business here', but I think that might be the biggest problem, rather than the financials of it all. BMW is already increasing it's stake in the operation to 75% and itself, BBA seems to be profitable entity - I'm sure to the point BMW could justify taking its stake to 100% - but if they have to keep a Chinese company involved, that would be irrelevant. If the remaining 25% is bought up aggressively by someone else, BMW get to walk away (not that they'd want to).
CrunchSlaughtered
RPM Ruler
As you said you don't keep pace. BMW will increase its share to 75% in 2022 for 3,4 bln USD, so this is still pending, which makes them extremely vulnerable in this case.
What I don't keep pace with is the Chinese rules around foreign/domestic partnerships, in as much as what happens if BMW take full control of BBA (IF they had to - which they probably don't). I'm aware of those specifics, they are mentioned in the annual reports, and I read the annual reports, annual reports are love, annual reports are life.
So, what makes them 'extremely vulnerable in this case'?
CrunchSlaughtered
RPM Ruler
The Chinese mother company owes 18 bln USD, and the state has removed its support to the company. In fact it is registered in an off shore region, which makes the things even more insecure. Obviously BMW has chosen quite a suspicious partner. This ownership is very strange for a state company from which a lot of questions arise, especially for the very purpose of its establishment.
This really only throws up more questions, which I don't expect you to know the answers to... so, ultimately I'm just curious to know what you think that actual risk to BMW is?
WORLD
Two strategic Chinese companies linked to the regime entered into default
Tsinghua Unigroup Co. said it was unable to pay a bond at 5.6%, or 1.3 billion yuan (US $ 197 million), issued privately due Monday, citing tight liquidity and after failing to secure immediate approval from creditors to delay full payment of the bond. Brilliance Auto Group Holdings Co., a Chinese automaker linked to BMW AG, also announced that it has defaulted on its 6.5 billion yuan (US $ 987 million) debt.
Production alteration
Brilliance Auto disclosed its own default on debt over 6.5 billion yuan through a statement posted on Chinabond.com, adding that it had 144 million yuan of interest due. He attributed his defaults to tight liquidity and the inability to obtain approval for credit line renewals. The defaults have affected production and operations and worsened its financial condition "significantly", the automaker said.
Brilliance Auto's bonds tumbled after it defaulted on its 1 billion yuan 5.3% three-year bond due October 23, intensifying concerns about its finances since its listed unit Hong Kong agreed to relinquish control of its joint venture with BMW by 2022. The China-based partnership has been a crucial source of profit for the group.
www.infobae.com
Two strategic Chinese companies linked to the regime entered into default
Tsinghua Unigroup Co. said it was unable to pay a bond at 5.6%, or 1.3 billion yuan (US $ 197 million), issued privately due Monday, citing tight liquidity and after failing to secure immediate approval from creditors to delay full payment of the bond. Brilliance Auto Group Holdings Co., a Chinese automaker linked to BMW AG, also announced that it has defaulted on its 6.5 billion yuan (US $ 987 million) debt.
Production alteration
Brilliance Auto disclosed its own default on debt over 6.5 billion yuan through a statement posted on Chinabond.com, adding that it had 144 million yuan of interest due. He attributed his defaults to tight liquidity and the inability to obtain approval for credit line renewals. The defaults have affected production and operations and worsened its financial condition "significantly", the automaker said.
Brilliance Auto's bonds tumbled after it defaulted on its 1 billion yuan 5.3% three-year bond due October 23, intensifying concerns about its finances since its listed unit Hong Kong agreed to relinquish control of its joint venture with BMW by 2022. The China-based partnership has been a crucial source of profit for the group.
Dos empresas chinas estratégicas y vinculadas al régimen entraron en default
Una de ellas es la principal compañía de chips. Incumplió el pago de su deuda por casi 200 millones de dólares
From Bloomberg
A Chinese automaker linked to BMW AG is looking increasingly in danger of a default, after missing a domestic bond repayment and seeing its debt sold off in recent days.
With some of its yuan notes yielding above 150%, investors appear to have priced in a strong possibility of an ultimate failure by state-run Brilliance Auto Group Holdings Co. to honor a bond that came due Friday.
What’s happening:
Parent of BMW’s joint venture partner in China, Brilliance Auto failed to repay its 5.3% three-year 1 billion yuan ($149 million) bond on time and said it is trying to raise funds and seeking a solution with investors. The borrower has a 30-day grace period to make good on the debt.
Investors don’t look optimistic. The automaker’s 5.4% bond due 2023 has plunged by almost 40% to 36.1 yuan since the latest round of selloff began a week ago. Its 6.2% bond due 2022 tumbled by about 83% on Tuesday to 10.3 yuan, according to Bloomberg-compiled prices. At least two of its notes carry implied yields of more than 150%.
Shares of its Hong Kong-listed unit Brilliance China Automotive Holdings Ltd., which manufactures vehicles with BMW via a joint venture in China, dropped as much as 5.75% on Wednesday.
Why does it matter:
Concerns have grown about the financial health of Brilliance Auto since its Hong Kong-listed unit agreed two years ago to give up control over its joint venture with BMW by 2022. The China-based joint venture has been a crucial source of earnings for the group.
Worries about a default started intensifying in August when some banks set up a creditor committee to coordinate claims on Brilliance Auto’s debt. Brilliance Auto has 17.2 billion yuan in outstanding bonds, according to data compiled by Bloomberg.
While it hails from the rust belt northeastern province of Liaoning that hosts some of China’s bleeding state-run firms, the automaker’s debt woes appear isolated in nature and threaten limited contagion.
What’s the company:
Brilliance Auto’s history dates back to 1949 when the People’s Republic of China was founded. It is one of the largest state-owned firms in the northeastern province, employing 47,000 people. It has four publicly-listed companies in Hong Kong and Shanghai, and about 160 units either wholly or partially owned, according to information on its official website.
In the first half of 2020, Brilliance Auto suffered a loss of 196 million yuan, according to its interim financial report. It generated 70 million yuan net profit attributable to shareholders in the same period a year ago. Cash from operations fell 16.75% to 4.96 billion yuan in the first half, while that from investing activities dropped by 123.63% to a negative 4.6 billion yuan.
What does the company say:
The automaker said in a statement dated Oct. 23 that it is faced with tight liquidity and funding pressure, adding there are “significant uncertainties” over its ability to raise sufficient funds in time.
Calls to Brilliance Auto’s information disclosure office went unanswered.
What do ratings agencies say:
Chinese credit rating firm Golden Credit Rating International Co. has twice cut Brilliance Auto’s rating in recent weeks. It now rates the firm BBB, down from AA+, citing a lack of debt repayment funding arrangements and large refinancing pressure.
In a report released in June, Golden Credit said Brilliance Auto has low profitability and relies heavily on its joint venture with BMW. In addition, sales from the joint venture are expected to fall this year with the pandemic crimping demand, it said.
What are traders watching next:
Investors are now more focused on Brilliance Auto’s effort to raise cash for its bond repayment and whether it will be able to produce a debt workout plan with its major lenders on the creditor committee. All eyes are also on the Liaoning authorities who have so far remained mum on their stance over the troubled state firm.
From Automotive News Europe
BEIJING/HONG KONG -- BMW said on Tuesday there was no indication that its deal to increase its stake in its China joint venture with Brilliance would be affected by debt issues at Brilliance's parent.
BMW said in 2018 that it would pay 3.6 billion euros ($4.2 billion) in 2022 for a further 25 percent stake in the venture with Brilliance.
"For the BMW Group, there is no indication that the validity of these contracts would be limited by the current situation," a BMW representative told Reuters on Tuesday.
"The BMW Group and the operating business of the joint venture BMW Brilliance Automotive Ltd. (BBA) are not directly affected by the payment difficulties of the Chinese Brilliance Group."
Huachen said Monday that its creditors had applied to restructure the company.
Since September Brilliance has held conference calls with investors to provide assurances that Huachen's debt problems were unlikely to impact the execution of the deal, three people who joined different calls said.
A fourth source close to the government in Liaoning province, where the joint venture is based, told Reuters that the authorities are keen to let BMW increase its stake in the JV and expand manufacturing capacity there as planned.
Brilliance and Huachen did not immediately respond to requests for comment.
Haitong International analyst Shi Ji said that according to the contract terms, 50 percent of BBA is not directly held by Brilliance, but through two layers of entities that are 100 percent owned by Brilliance and its subsidiary.
Therefore, even if Huachen Group goes bankrupt or transfers its stakes, BBA's operation is legally protected, he said.
China has seen a smattering of high-profile Chinese debt defaults in recent days, spooking traders and sparking a bond market selloff. The latest clutch of defaults, which Goldman Sachs noted are bigger and include more state-owned enterprises than last year, highlight that investors need to pay close attention to avoid being caught in the credit cleanup.
Bondholders see a bankruptcy restructuring by Huachen to be unfavorable as they will likely end up getting little out of the process.
Sources told Reuters in September that Chinese state-backed investors are considering taking Brilliance private, although that is not expected to affect BMW's plan to lift its stake.
A Chinese automaker linked to BMW AG is looking increasingly in danger of a default, after missing a domestic bond repayment and seeing its debt sold off in recent days.
With some of its yuan notes yielding above 150%, investors appear to have priced in a strong possibility of an ultimate failure by state-run Brilliance Auto Group Holdings Co. to honor a bond that came due Friday.
What’s happening:
Parent of BMW’s joint venture partner in China, Brilliance Auto failed to repay its 5.3% three-year 1 billion yuan ($149 million) bond on time and said it is trying to raise funds and seeking a solution with investors. The borrower has a 30-day grace period to make good on the debt.
Investors don’t look optimistic. The automaker’s 5.4% bond due 2023 has plunged by almost 40% to 36.1 yuan since the latest round of selloff began a week ago. Its 6.2% bond due 2022 tumbled by about 83% on Tuesday to 10.3 yuan, according to Bloomberg-compiled prices. At least two of its notes carry implied yields of more than 150%.
Shares of its Hong Kong-listed unit Brilliance China Automotive Holdings Ltd., which manufactures vehicles with BMW via a joint venture in China, dropped as much as 5.75% on Wednesday.
Why does it matter:
Concerns have grown about the financial health of Brilliance Auto since its Hong Kong-listed unit agreed two years ago to give up control over its joint venture with BMW by 2022. The China-based joint venture has been a crucial source of earnings for the group.
Worries about a default started intensifying in August when some banks set up a creditor committee to coordinate claims on Brilliance Auto’s debt. Brilliance Auto has 17.2 billion yuan in outstanding bonds, according to data compiled by Bloomberg.
While it hails from the rust belt northeastern province of Liaoning that hosts some of China’s bleeding state-run firms, the automaker’s debt woes appear isolated in nature and threaten limited contagion.
What’s the company:
Brilliance Auto’s history dates back to 1949 when the People’s Republic of China was founded. It is one of the largest state-owned firms in the northeastern province, employing 47,000 people. It has four publicly-listed companies in Hong Kong and Shanghai, and about 160 units either wholly or partially owned, according to information on its official website.
In the first half of 2020, Brilliance Auto suffered a loss of 196 million yuan, according to its interim financial report. It generated 70 million yuan net profit attributable to shareholders in the same period a year ago. Cash from operations fell 16.75% to 4.96 billion yuan in the first half, while that from investing activities dropped by 123.63% to a negative 4.6 billion yuan.
What does the company say:
The automaker said in a statement dated Oct. 23 that it is faced with tight liquidity and funding pressure, adding there are “significant uncertainties” over its ability to raise sufficient funds in time.
Calls to Brilliance Auto’s information disclosure office went unanswered.
What do ratings agencies say:
Chinese credit rating firm Golden Credit Rating International Co. has twice cut Brilliance Auto’s rating in recent weeks. It now rates the firm BBB, down from AA+, citing a lack of debt repayment funding arrangements and large refinancing pressure.
In a report released in June, Golden Credit said Brilliance Auto has low profitability and relies heavily on its joint venture with BMW. In addition, sales from the joint venture are expected to fall this year with the pandemic crimping demand, it said.
What are traders watching next:
Investors are now more focused on Brilliance Auto’s effort to raise cash for its bond repayment and whether it will be able to produce a debt workout plan with its major lenders on the creditor committee. All eyes are also on the Liaoning authorities who have so far remained mum on their stance over the troubled state firm.
From Automotive News Europe
BEIJING/HONG KONG -- BMW said on Tuesday there was no indication that its deal to increase its stake in its China joint venture with Brilliance would be affected by debt issues at Brilliance's parent.
BMW said in 2018 that it would pay 3.6 billion euros ($4.2 billion) in 2022 for a further 25 percent stake in the venture with Brilliance.
"For the BMW Group, there is no indication that the validity of these contracts would be limited by the current situation," a BMW representative told Reuters on Tuesday.
"The BMW Group and the operating business of the joint venture BMW Brilliance Automotive Ltd. (BBA) are not directly affected by the payment difficulties of the Chinese Brilliance Group."
Huachen said Monday that its creditors had applied to restructure the company.
Since September Brilliance has held conference calls with investors to provide assurances that Huachen's debt problems were unlikely to impact the execution of the deal, three people who joined different calls said.
A fourth source close to the government in Liaoning province, where the joint venture is based, told Reuters that the authorities are keen to let BMW increase its stake in the JV and expand manufacturing capacity there as planned.
Brilliance and Huachen did not immediately respond to requests for comment.
Haitong International analyst Shi Ji said that according to the contract terms, 50 percent of BBA is not directly held by Brilliance, but through two layers of entities that are 100 percent owned by Brilliance and its subsidiary.
Therefore, even if Huachen Group goes bankrupt or transfers its stakes, BBA's operation is legally protected, he said.
China has seen a smattering of high-profile Chinese debt defaults in recent days, spooking traders and sparking a bond market selloff. The latest clutch of defaults, which Goldman Sachs noted are bigger and include more state-owned enterprises than last year, highlight that investors need to pay close attention to avoid being caught in the credit cleanup.
Bondholders see a bankruptcy restructuring by Huachen to be unfavorable as they will likely end up getting little out of the process.
Sources told Reuters in September that Chinese state-backed investors are considering taking Brilliance private, although that is not expected to affect BMW's plan to lift its stake.
As it says here it does not affect BMW plans
www.bmwblog.com
BMW claims plans to take over Brilliance Auto unfazed by recent trouble
BMW claims that its plance to further invest in its Chinese partner Brilliance Automotive are unfazed by recent trouble.
CrunchSlaughtered
RPM Ruler
That's not true. If the parent company files for bancrupcy, than none of its assets can be sold without the approval of the creditors. We do not know who exactly are the biggest creditors, but if it is the Chinese state it could easily block the deal. In addition, this shares, that BMW intents to acquire for those 4 bln USD could be worth 10 times less till 2022.As it says here it does not affect BMW plans
BMW claims plans to take over Brilliance Auto unfazed by recent trouble
BMW claims that its plance to further invest in its Chinese partner Brilliance Automotive are unfazed by recent trouble.
BMW isn't buying Huachen's assets. Even if it were, why would creditors block (even if they could) a lucrative sale, that's been agreed in principle, at what may well end up being at above market price, if that was their best hope of payment - and also risk BMW terminating the entire agreement should any third party try and step in, which it sounds like they're contractually able to do, and all that relies on Huachen going bankrupt anyway - which current;y they are not. I mean, I'm not saying you are wrong Crunch, but I think you're always a little too keen to doom-monger over everything when it comes to internal combustion engine car makers.
If BMW's long game is to have BBA as a wholly owned subsidiary, I'm still not seeing any of this as particularly bad for business.
CrunchSlaughtered
RPM Ruler
Why do you look for logic in the actions of the Chinese government? Do you play chess? Than you should know what a Queen's gambit means. Quality for position. Whether the deal is lucrative or not is the least important thing for them. The important thing is to keep the Germans obedient.
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BMW
Bayerische Motoren Werke AG, abbreviated as BMW is a German multinational
manufacturer of luxury vehicles and motorcycles headquartered in Munich, Bavaria, Germany.
The company was founded in 1916 as a manufacturer of aircraft engines, which it produced
from 1917 to 1918 and again from 1933 to 1945.
Official website: BMW (Global), BMW (USA)
Official website: BMW (Global), BMW (USA)
