On July 5, Brilliance China Automotive (01114-HK) announced that it had signed a framework cooperation agreement with Renault Automobile on July 4. According to the agreement, Renault Automobile agreed to acquire Brilliance China Assets, and Brilliance China will sell 49% equity interest in Shenyang Brilliance Jinbei Automobile Co., Ltd. (hereinafter referred to as Brilliance Jinbei) to Renault at a cash consideration of RMB1. After the completion of the acquisition, Brilliance China Automotive and Renault will import a total of 1.5 billion yuan in registered capital to Brilliance Jinbei.
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The main business of Brilliance Jinbei is the manufacture and sale of light passenger cars and related auto parts. In the future, Brilliance Jinbei will manufacture and sell Jinbei, Huaying and Renault brand light commercial vehicle products. Earlier, Brilliance China acquired a 39.1% stake in Brilliance Jinbei from Jinbei Automobile.
The Board of Directors of Brilliance China stated that after the acquisition of Renault, the Board of Directors of Brilliance Jinbei will consist of nine directors, five of whom will be appointed by Brilliance China and four by Renault. Brilliance China said that the cooperation with Renault is a “key strategic measure†and will be an important step in the transformation of the existing light passenger car business of Brilliance Jinbei.
With the addition of Renault, Brilliance China believes that Brilliance Jinbei can use the experience of the two shareholders to increase the potential of the domestic light commercial vehicle market. It is understood that Brilliance Jinbei will introduce Renault light commercial vehicle products as planned, for local production, and can use Renault technology to develop gold cup products. In addition, based on existing or new product development, Brilliance Jinbei will develop new energy products.
According to public data, Renault accounted for 15.9% of the European light commercial vehicle market in 2016, ranking first in the European light vehicle. In the field of light commercial vehicles, Renault has established partnerships with Nissan, Daimler and Euron.
Among the assets of Brilliance Auto's listed companies, Brilliance Jinbei has been in a state of loss for a long time. Data show that in 2016, Brilliance Jinbei's operating income increased by 3.53% compared with the same period of last year, but the net profit fell from -36 million yuan in 2015 to -208 million yuan, down 691.87% year-on-year, and the return on net assets also fell 124.51%. In the first quarter of this year, compared with the same period last year, its net profit fell to -0.53 billion yuan, down 431.84%.
According to the target set by Brilliance's “13th Five-Year Planâ€, Jinbei truck sales will reach 200,000 units, and the “Golden Cup†will be made into an international brand with certain influence. After Renault took over, whether the Brilliance Light Commercial Vehicle could find its past status again still needs to be questioned.