Borgward Auto Owned by UCAR to Undergo Bankruptcy Proceedings
Borgward Auto, owned by Chinese travel and auto services firm UCAR, is to undergo bankruptcy proceedings, with a public announcement to be issued as soon as early July. “Borgward is inevitably doomed. It never made it, no buyer is interested in taking it over, so bankruptcy is by far the most preferable option,” said one source, adding that the final decision will be disclosed in July at the earliest.
Founded in Germany in 1919, Borgward started out on a par with BBA but went bankrupt in 1961. In 2014, Foton Motor Group, a subsidiary of BAIC Group, acquired the Borgward brand for 5 million euros and later manufactured cars primarily under the Beijing Borgward brand in China.
Upon its launch in April 2016, the Borgward BX7 gained significant orders, sustaining sales of 5,000 vehicles for several months and hitting 6,000 vehicles per month at its peak. The early success of Borgward was even regarded as a classic business case worthy of study and admiration. In 2017, however, the monthly sales of the Borgward BX7 slipped to around 3,000 vehicles.
Borgward came to a close again after just four years due to multiple deficiencies in profitability, brand power and product power. On July 29, 2019, UCAR took over 67% of Beijing Borgward, and the Borgward car became a member of the UCAR team.
Lu Zhengyao, also known as Charles Lu, is now the chairman and CEO of UCAR, chairman of Borgward, and was the non-executive chairman of Luckin Coffee. In 2019, the annual sales of Borgward leapt to 54,500 units, according to official data from Borgward. But in 2020, the year in which Luckin Coffee plummeted in response to a prominent financial fraud scandal, the UCAR line was impacted, and Borgward’s annual sales plummeted to 8,740 vehicles, a sharp drop of 84% year-on-year.
SEE ALSO: Luckin’s Ex-Chairman Lu Zhengyao Becomes Judgment Debtor for Third Time, Faces $188 Million Fine
“The plan that UCAR has for Borgward is similar to the one for Luckin Coffee. Instead of 4S stores, the company sells online and recruits franchisees. Also, UCAR is internally using Borgward cars,” said former employees of Borgward in a joint statement.
UCAR is a leading comprehensive service platform in the travel and auto sector in China, comprising four major sectors: rentals, tailored taxi service, auto purchasing and quick auto loans.
