Automakers around the world have now made peace with slumping sales in China. After decades of dominance that has shifted between Americans, Germans, Japanese and the Koreans, it is now time for China to shine.
Amid falling sales of foreign automakers in the country, the local automotive industry saw ballooning sales. Hence, instead of whining about the problem at hand, automakers are now trying to prevent their footprint from fading and finding a way around to improve in the world’s biggest automotive market.
On a similar note, Volkswagen Group is now exploring prospects of purchasing a big stake in its Chinese electric-vehicle joint-venture partner JAC Motors. The German automaker has tapped Goldman Sachs as an adviser of the plan, sources familiar with the matter said.
Volkswagen currently stands as the largest foreign automaker in China.
At the moment, Volkswagen stands as the largest foreign automaker in China. Its acquisition of JAC is the latest step by a foreign automaker to increase their stakes in their Chines joint venture partners or in the ventures themselves since Beijing relaxed ownership rules last year in the country.
In October last year, BMW agreed to buy control of its main joint venture in the country for $4.05 billion. Daimler also plans to increase its stake in local partners BAIC. Ahead of easing the rules, foreign automakers were prevented from controlling any Chinese automaker or joint venture. This cap was removed last year for companies making full-electric and PHEVs. Limits on commercial vehicles makers ease in 2020 and by 2022 for the wider car market.
With a market capitalization of $84 billion, VW is currently not a shareholder in Shanghai-listed JAC, which has a market value of about $1.7 billion, according to Refinitiv data. Reports suggest that VW’s plans are at an early stage, but it is keen to take a big stake.
When contacted by Reuters, VW said: “We are carefully watching what the implications are for our business and for our joint venture partners. In this regard, we will explore all possible options together with all stakeholders to secure long-term success in China.”