Rumors are circulating that Chinese travel service provider Ctrip is in negotiations to buy China Auto Rental (CAR) to expand its car rental business. If this is true, that means Luckin’s non-executive chairman Charles Zhengyao Lu will have another one of his companies going through major changes.
President of Ctrip’s car rental department Peng Yan denied the takeover rumor, but people think it would a reasonable move since Ctrip is looking to strengthen the car rental link of its one-stop travel service platform, and CAR’s credit rating has been negatively affected by Luckin’s financial fraud.
Public info shows that Ctrip’s car rental business covers more than 6,000 cities across the globe, including 9,000 travel destinations globally and 15,000 branches domestically. The growth rate was about 70% for its domestic business, around 50% for international business, and its annual GMV reached 1 billion yuan, Peng said last October.
CAR executives said during an interview with the Financial Times that Charles Lu would consider stepping down as chairman to distance the company from the Luckin scandal fallout. CEO Song Yifan said CAR has no equity stake or business relationship whatsoever with Luckin.
S&P Global has downgraded CAR’s credit rating from B+ to B-, citing concerns from its association with Luckin. The rating agency said despite being a separately listed company, CAR’s connection with Luckin through Lu has made investors worried about its management and ability to tap capital markets.
Adding to the chaos, Borgward, another company that Lu has heavily invested in, was recently revealed to have paid off its debt to Foton with 4 billion yuan of fixed assets. Last year, Borgward and Luckin jointly launched a series of marketing campaigns. Insiders once revealed that Luckin and Borgward were working on integrating resources.