China’s Great Wall looking to partner with BMW to sell cars in the West

18 October 2017 - autoblog

China’s Great Wall looking to partner with BMW to sell cars in the West

The Chinese automaker Great Wall seems to have moved on from courting Fiat Chrysler.

According to Reuters, the company announced in a stock exchange filing that it's looking to collaborate with BMW's Mini brand in some way. Reuters also reports that BMW is open to discussion.

We reached out to a BMW representative, and he provided us with an official statement regarding the news. The company didn't specifically say it is talking with Great Wall. What it did say is that it has had success with its current partnership with another Chinese automaker Brilliance, but also that the company is interested in expanding the Mini brand worldwide and in China. The statement says that Mini's future strategy and expansion will include "diversification of partnerships and new cooperation models." It also said that expanding in China "is only possible with a local partner." That sounds to us like BMW is pretty interested in working with Great Wall.

This move comes about a month and a half after Great Wall attempted to purchase parts of Fiat Chrysler. The company was reported to be talking to FCA to purchase the Jeep brand, and it later confirmed that it was interested in that brand, a few, or the whole company. But things seemed to fall apart when Fiat Chrysler's CEO Sergio Marchionne announced it hadn't received any offers and wasn't working on any kind of deal with another company.

Great Wall M4

Now it may seem a little odd that Great Wall would shift from trying to buy an SUV brand, or a company that is beginning to concentrate on crossovers and trucks, to one that specializes in compact cars. After all, they're fairly different segments. Our theory is that Great Wall isn't necessarily interested in the specific products, but more that it's looking for a gateway to Western car markets.

It's not something new for the company. As far back as 2013, the company made it clear it was looking to start selling cars in America. It also started looking into a manufacturing facility in Mexico earlier this year, which would supposedly supply vehicles to both Mexico and the U.S. Now when Great Wall announced its American sales intentions, it was targeting a date of 2015.

That obviously didn't happen, and it probably has something to do with the company's products. Most of the cars under the Great Wall and Haval brands bear an uncanny appearance to discontinued models from other companies that compete in the West. The Great Wall Haval H5E looks very similar to an Isuzu Axiom, the Great Wall M4 is a looks much like a Scion xA, but with a higher ride height. We could go on. And the company has some subsidiaries with more unique vehicles, but they clearly aren't ready for America either.

Great Wall H5E

So instead of investing enormous amounts of money in creating vehicles on their own for the U.S. and Western Europe, it would make much more sense to get a boost by partnering or purchasing a company that already competes there. If it had been able to buy Jeep or another piece of Fiat Chrysler, it would have had access to vehicles and production capabilities that are ready to go for those markets. It could then glean what else was needed to continue selling and updating vehicles here. And clearly owning a Western car company has been working out for Geely, which has seen great success with Volvo, just recently bought Lotus, and intends to launch the Lynk & Co car brand with Volvo platforms in the U.S. in 2021.

In the case of a BMW/Mini deal, the company might not have immediate access to platforms and technology to sell and to use for its own brands. But more importantly to its long-term success, it can learn about what sort of quality benchmarks have to be reached, and perhaps get some tips and help in developing Western-friendly cars.

What would BMW have to gain from a deal? Well, as the Reuters story points out, it would give BMW a way to expand into China, which continues to expand into one of the most important car markets. Getting help from Great Wall for parts and component manufacturing could also help cut costs on Minis, allowing the company to either make Minis more affordable or, more likely, profitable. The possibilities are intriguing, and we'll be keeping an eye on the situation.

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