The situation is reversed! It is no longer the case for joint venture car companies that foreign countries provide technology and take away most of the profits, while domestic companies provide cheap labor and obtain meager profits.After entering the new energy era, more and more overseas car companies are cooperating with domestic car companies in order to use the advanced technologies of Chinese car companies, such as Volkswagen and Xpeng. BMW, a well-known foreign luxury car company, and Great Wall, a well-established domestic car company, jointly established a subsidiary, Beangguang Automobile. Recently, after the control over automobile production qualifications was relaxed, they successfully obtained the production qualification.
Beam Auto is 50% owned by BMW and Great Wall Motors each, with equal status. It mainly produces pure electric MINI models, and its first mass-produced model rolled off the assembly line in October this year. According to the plan, small batch models are currently only available for overseas markets and are expected to be available globally next year.
Cooperating with Great Wall, BMW finds the direction of the new era
Some time ago, the European Union announced an investigation into China's new energy vehicle subsidies. German car companies Volkswagen and BMW have come out to oppose it, believing that the EU's behavior is not in line with the spirit of fair competition.
The main reason why Volkswagen and BMW oppose the EU investigation is that China's new energy vehicle subsidies do not restrict car companies, and joint venture cars can also enjoy them. Moreover, the cars produced by these car companies in China may also be exported to other regions. For example, the BMW iX3 has also been investigated by the EU. What's more, these car companies sell hundreds of thousands of vehicles in China every year. If China counterattacks, they will make a lot less money.
Beam Auto, a joint venture between BMW and Great Wall, plans to produce three MINI Cooper models and a compact crossover model. The main market is likely to be Europe, because the current domestic acceptance of MINI models starting at around 200,000 yuan is not too high.
According to data from the Ministry of Public Security, as of March 2022, the number of domestic cars was 307 million, and only about one car for a family of five. When you can only buy one car, sedans and SUVs are undoubtedly the best choices. Minivans, which are easy to use for transporting people and goods, also meet the needs of the working class. However, MINI models appear to be insufficient in practicality and are not suitable for the car needs of domestic consumers.
If the price is cheap, such as Hongguang MINIEV, Panda Mini, Ice Cream and other mini-cars, it is not impossible for ordinary consumers to bear the pain of buying one for daily commuting. However, it is difficult for mini-cars starting at 200,000 yuan to have a domestic market. Europe's consumption power and infrastructure are undoubtedly suitable for MINI models.
With the world's largest market, strongest transportation capacity, preferential policies and other advantages, China will become the global automobile production center, and European and American car companies are transferring production capacity to China. Through cooperation with Great Wall, BMW can significantly reduce vehicle production costs and have the opportunity to use Great Wall's new energy technology. Great Wall Motors is one of the old domestic giants and has considerable experience in the fields of small and mini cars and electric vehicles. Its mini car brand Euler has accumulated sales of 104,000 units in 2022.
Overseas traditional car companies do not understand the pain of domestic car companies, and they are obviously not as radical as domestic car companies in the face of electrification transformation. In order to obtain domestic advanced electric vehicle technology, Volkswagen cooperated with Xpeng Motors and invested US$700 million in Xpeng.
BMW and Great Wall Motors are cooperating with each other to hold half of the shares in Beam Auto. There is a high probability that Great Wall Motors' technology will be used in future products to improve product competitiveness. Among the domestic established car companies with strong technical capabilities, only Great Wall currently performs well in the field of high-priced small and mini cars. Perhaps this is one of the key factors why BMW chose Great Wall.
When Great Wall chose BMW, it naturally had its own plans.
Cooperating with BMW, Great Wall’s unique way to go overseas
"If you can, go and make money from foreigners!"
I don’t know how many domestic companies have been criticized in this way. It seems that only earning foreigners’ money is a symbol of a company’s strength. This year, Chinese auto companies surpassed Japan and Germany to become the world's largest auto exporter, giving the auto industry and consumers strong confidence.
After entering the new energy era, it seems that all car companies are busy entering overseas markets, completely ignoring their own sales. However, it is not so easy to enter overseas markets. Domestic car exports surpass those of Japan and Germany because overseas traditional car companies will choose to build factories in the target market, and export models will mainly be products that have not been released in the target market.
Domestic car companies have also successively invested in building factories in Latin America and Southeast Asia to reduce tariffs and transportation costs when exporting vehicles, but it may take some time to start production. Moreover, domestic car companies in the European and American markets have not been able to achieve very good results for the time being. Even if they won the XX championship in the promotion, the overall sales volume was not ideal.
A major advantage of the cooperation between Great Wall and BMW is that Beam Auto can access the sales channels of Great Wall and BMW at the same time. Great Wall holds 50% of the shares of Beang Auto. It is not wrong to say that Beam Auto belongs to Great Wall. With the support of BMW's brand and sales network, Beangguang Automobile is expected to achieve good sales in the European and American markets.
In other words, perhaps this is the right solution for automobile exports. There are too many established giants in Europe and the United States. Volkswagen, Mercedes-Benz, BMW, Peugeot, Ford, and General Motors are all powerful. Moreover, there are many local policies restricting the sale of Chinese automobiles. For example, according to the EU investigation, the United States even raises taxes on parts exported from China.
It is too difficult for domestically produced cars with a relatively weak foundation to enter the local market. This is why domestically produced cars generally regard Southeast Asia, Latin America and other regions as their primary overseas markets. The Beam Automobile jointly developed by Great Wall and BMW belongs to BMW in Europe and belongs to both BMW and Great Wall in China, so the restrictions will be much smaller.
With BMW's brand support, it will undoubtedly be easier for Beam Auto to enter the European and American markets, and the cost of domestically produced MINI models will most likely be lower, which will help BMW implement price wars in the European and American markets. European users have previously protested because the domestic price of Volkswagen ID.3 starts at 125,900 yuan and the European price starts at 300,000 yuan. Europeans have suffered from the high prices of European cars for a long time!
Other car companies may also follow Great Wall's cooperation plan with BMW and reach cooperation with European and Japanese car companies. Each party will hold half of the shares. Both technical interaction and market expansion will be much simpler. Overseas car companies do not have to worry about being eliminated by rising domestic cars. Domestic car companies can also fully explore overseas markets and achieve win-win cooperation.
Of course, there is a prerequisite for all this, and that is whether the performance of the beam car can set an example for this model and prove its feasibility.
The future of Beam Auto is a beacon for other car companies
Liangguang Auto provides a new solution for the joint venture model between car companies in the era of electric vehicles. However, whether other car companies can choose the same model depends on what achievements Liangguang Auto can achieve.
From the perspective of acceptance, the main markets for small and mini cars are in Europe and domestic first- and second-tier cities. Europe's infrastructure is old, and many streets may be hundreds of years old. It is difficult for large cars to pass, but small and micro cars are more efficient.
Although the infrastructure in first- and second-tier cities in China is good, there are too many cars. Traffic jams have become a daily occurrence, and parking spaces are difficult to find. Many parking spaces have very small spaces, making it easier for small and micro cars to pass and park. Of course, the price of the Beam Auto MINI model starting at 200,000 yuan is still a bit expensive, and consumers may not accept it so easily.
Focusing on small and micro cars has limited the development of Beam Auto. However, with the increasing domestic consumption level and changes in the traffic environment, small and micro cars will also have a larger market space in the future. Statistics from Beijing Zhengze Dacheng show that the average selling price of domestic passenger cars in the first three quarters of 2022 has reached 193,000 yuan. In 2017, the figure was still 136,500 yuan, an increase of almost 10,000 yuan a year.
The success of Beam Auto will set a benchmark for other car companies.Xiaotong boldly predicts that in the future, more car companies will adopt an equal-share joint venture model to share technology and sales channels to achieve mutual benefit and win-win results in the era of electric vehicles.