Great Wall confirms talks with BMW for 'Mini' in China

A worker prepares to put a spare tire into a Haval SUV H2 model in the Great Wall Motors assembly plant in Baoding, North China's Hebei province, Feb 19, 2017. [Photo/IC]

Great Wall Motor Co has confirmed that it is in talks with BMW to produce the latter's Mini brand cars in China, which analysts see as a prelude to the German carmaker's attempt to seize greater success in its largest market.

The talks are in a preliminary stage and the companies have not entered into any legal agreement to establish a joint venture in China, Great Wall said in a statement to the Hong Kong stock exchange on Friday.

Great Wall said the two signed a deal in early 2016 to explore the feasibility of developing and producing electric and traditional cars and then another in February this year regarding Mini car cooperation.

BMW now has a joint venture with Brilliance China Automotive Holding, with the contract to expire by 2028, while Great Wall is among the few Chinese automakers without an international carmaking partner.

Patrick Yuan, an analyst at Jefferies Hong Kong, said it is understandable that BMW is seeking a new partner in a competitive market like China.

"We believe Brilliance is only a financial investor in the joint venture, contributing little to BMW's success in China."

BMW sold 383,976 cars in China from January to August, representing 16 percent growth, and coming second to its long-time rival Mercedes-Benz.

Yuan said the success of Audi in forging a second joint venture in the country earlier this year further boosts the confidence of BMW management.

Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight, said Great Wall is more efficient than BMW's current partner Brilliance China Automotive in both production capabilities and expanding sales channels.

He believes that the Mini brand cars, because of their small number, might serve as an "appetizer", and that other models might follow if the project goes smoothly.