Trouble May Be Brewing With Great Wall Partnership

In addition to its longstanding joint venture with Brilliance, BMW more recently engaged with another Chinese automaker, Great Wall Motors. The motivation behind the partnership was to develop and build an electric vehicle platform that could underpin future MINI EVs and Great Wall models. These vehicles would be produced in China, and the two auto manufacturers signed an agreement back in 2018 to build a factory in Jiangsu.

Now, with a global trade war starting to weigh on Chinese manufacturing output, Chinese State Planning authorities have enacted new, stronger regulations for the construction of additional factories. Through June of 2019, Chinese auto sales have declined for twelve months straight, and market demand is expected to shrink 5% this year, something that hasn’t happened in over twenty years. Both Great Wall and BMW have officially stated that things are proceeding as planned, but an insider report via a German news website paints a much more negative picture; negotiations are reportedly deadlocked over cost versus quality constraints, with even basic safety designs supposedly not a top priority for Great Wall, and travel plans for BMW engineers are now being cancelled.

The disagreements reportedly stem from Great Wall prioritizing cost savings over quality, something that is an anathema for German manufacturing as a whole. The differences of opinion reportedly run so deep, that current cost estimates and plans to build the proposed Jiangsu factory are said to be far too conservative, and that adhering the BMWs level of quality will take hundreds of millions more in terms of investment.

At this point, dozens of BMW engineers were supposed to have setup shop in China, but this hasn’t happened yet, as high level negotiations continue to play out. Meanwhile, accountants at BMW are now scrutinizing every facet of the proposed partnership, and questioning its potential efficacy. Some unnamed individuals have even gone as far as to consider the possibility of outright failure as the most probable result.

According to the Japanese press, the factory is planned to cost roughly $800,000,000, with another $200,000,000 in capital investment following in subsequent years, and models rolling off the line starting in 2023.—Alex Tock

[Photos courtesy BMW AG.]

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