Published on June 24th, 2021 | by Daniel Sherman Fernandez0
Borgward China Filing For Bankruptcy This July 2021
Borgward Was A No Show At The 2021 Shanghai Auto Show
Borgward started life in 1919 in Germany and by 1960, Borgward was the fifth largest car manufacturer in Germany and by September 1961 Borgward was bankrupt and was forced to close its doors for good.
Borgward began selling cars in China and Europe after Foton, the commercial vehicle subsidiary of Chinese state-owned Chinese group BAIC, acquired the rights to the brand in 2014.
Foton hoped the Borgward name would help it to add a successful car business to its truck sales. German names have a good reputation in China and Foton wanted Borgward to compete with German automotive rivals Volkswagen, BMW, Mercedes-Benz and Audi.
Foton sold 67 percent of its shares in Borgward for 3.97 billion yuan (USD578 million), to the Chinese ride-hailing and short-term-rental provider Ucar in early 2019. Ucar is the largest car buyer in China, with its fleet of 400,000 vehicles across 300 cities in China. It has 80 million users in the country.
The use of Borgward vehicles for Ucar’s services initially stabilized sales figures. But from the beginning there were considerable doubts about the new business model.
Recent sales data from the China Passenger Car Association showed that monthly sales for Borgward were just a measly 430 vehicles, down by a massive 40.3 percent from a year ago. The cumulative sales in the first five months of 2021 slumped to a low 41.3 percent year on year to 2,627 vehicles.
New Owners From China
There are rumors in the market that technology company Xiaomi is about to buy the Borgward Automotive in China. It is said that Xiaomi is not ready to set up its factory in the early stage of its entry into the automotive market due to the high cost. By buying Borgward, they would have factories with a relatively new production line with advanced factory design and a high degree of automation.
An investment in the single-digit billion range would be conceivable through the announced investment goals of up to CNY 10 billion. The current offer still seems too small, but the investment would be an exciting alternative instead of choosing a company like BYD as OEM.
Well, the problem starts from the brand owner in China and the Malaysia dealer cannot be blamed for this retirement. Meanwhile, just like Chery and Jin Bei who opened up in Malaysia, sold some cars and then retired, it is first batch of buyers who have to worry now about parts and service.