(Yicai Global) Sept. 1 -- German carmaker BMW's Chinese arm is waiting for approval to make use of the manufacturing capacity of the troubled parent of its ally Brilliance China Automotive Holdings, it said to Yicai Global.

"We would like to utilize Brilliance Automobile Manufacturing's existing production capacity," BMW China told Yicai Global, responding to rumors about the company's alleged plan to purchase another car brand of Shenyang-based Huachen Automotive Group Holdings, Zhonghua. "However, the concerned project is still in the approval process from relevant authorities."

The European car ally could offer a helping hand amid state-owned Huachen's troubles. BMW China could buy Zhonghua for CNY1.6 billion (USD247.6 million) as the indebted Huachen and 11 other firms passed such a proposal at a creditors' meeting yesterday, financial magazine Caijing reported.

"We want to support the restructuring of Brilliance Group with concrete actions and committed to further developing our footprint in Liaoning province," said Yu Miao, a staff member at BMW China's marketing department.

The firms have been cooperating for almost two decades. Huachen's unit Brilliance China and BMW established a 50:50 joint venture called BMW Brilliance Automotive in 2003.

The JV is important to both of the partners. In the first half of 2020, it earned CNY4.4 billion in profit for Brilliance China, up 23 percent from a year ago. Meanwhile, the Chinese carmaker's other businesses resulted in a loss of CNY338 million (USD52.3 million).

But the JV means a lot to the German company too as China is BMW's largest sales market. "With great support from the Liaoning and Shenyang government, BMW Group has been developing a win-win partnership with Brilliance Group over the past 18 years," said Yu.

"To BMW, Liaoning province and the city of Shenyang have become the crucial innovation and production base in China, and the cornerstone of our future success in China,” Yu added.

Last November, a court in Shenyang ruled Huachen bankrupt due to bond defaults. Technically, the subsequent restructuring involves the firm's own brands, not its JVs with BMW and Renault.

Editor: Emmi Laine, Xiao Yi