Exclusive interview with Bruno Lambert, Global President, Borgward
“UCAR and Borgward are creating a new integrated “animal” to transform automotive retail from a traditional one-time static transaction model to a dynamic lifetime usage model where car ownership and shared mobility can be complementary.”
BEIJING – CAR Inc., China’s leading car rental platform, recently began offering one-day free rentals for Borgward’s BX5 and BX7 SUVs. Customers can rent any one of 30,000 Borgwards available on the platform and take it for a spin for a maximum of 24 hours at no cost.
It’s essentially an extended test drive and part of parent company UCAR Inc.’s efforts to redefine automotive retail.
UCAR Inc., the comprehensive services platform for automotive and mobility services – including ride-hailing, ride-sharing, O2O sales and financing in addition to car rental – is also the majority owner of Borgward after it acquired a 67 percent stake in Beijing Borgward Automotive Co., Ltd. for ¥4.19 billion from previous owner Foton late last year.
It’s an odd marriage that brings together one of the most well-known car rental and ride-hailing platforms in China with an iconic German brand which is trying to reestablish itself in China with Chinese investment backing ever since its revival four years ago.
So far Borgward has not had much success in establishing itself as a top-tier brand in China despite its German heritage, but now with UCAR as new strategic investor, the two together are trying to create a “third manufacturing force” between the current traditional OEMs and Chinese smart EV startups. The one-day test drive is just one of many things up the sleeves of this new entity as it embarks on a new strategy to redefine automotive retail.
“This is a very unique setup,” Bruno Lambert, global president of Borgward, told CBU/CAR in an exclusive interview in Beijing on June 18. “Having an integrated company creates a new animal which also creates new type of relationships with different industry stakeholders like OEMs, tier-1 suppliers and so on. We have been observing this over the last few months and generating all those leads in developing new partnerships and are now moving quite fast. This is a key asset which UCAR brought into the picture. Six months ago I would not have seen half of what I see today.”
From static one-time transaction to dynamic lifetime usage
The big aim of the new integrated company, according to Lambert, is to change automotive retail from the traditional one-time static transaction model to a dynamic lifetime usage model where car ownership and shared mobility, essentially conflicting ideas, can complement each other.
He believes that with UCAR being the largest single car buyer in China with a fleet of 400,000 cars and 80 million users across its rental and rid-hailing platforms, it is primed to use those assets to disrupt traditional retail.
“Borgward for sure is not yet well known in China. You have to be confident and you have to show it to your family and friends, for 24 hours, not one hour,” commented Lambert on the one-day test drive.
“It is also about how you offer special financing to reduce risk of residual value of a vehicle, which for a brand like Borgward is probably one of the biggest obstacles. We can take care of this. Part of the reason why we can do it is because we change the relationship with the customer by lowering the risk and thresholds and creating value with new services. More convenience with lower financial risk， that’s what we can create by having the fleet in the back.”
UCAR and Borgward jointly announced their new retail strategy on January 8 focused on creating a new retail platform for Borgward where production and distribution are separated and new retail is redefined. Under this new model, Borgward, with its existing manufacturing facility in Beijing, focuses on product R&D, manufacturing and aftersales service, while dealers focuses on sales with a zero-inventory model. The new retail platform itself becomes an enabler for dealers in the areas of branding, financing, inventory, customer traffic and IT, thereby reducing dealer cost, improving customer experience and lowering their decision cost through offers such as the one-day free test driver.
Lambert made his public appearance as Borgward Global President at the January event after joining the company 10 days earlier, when UCAR officially announced its acquisition in Borgward. Previously, he was CEO of smart EV startup ICONIQ Motors since March 2017, following nearly 12 years at Magna Steyr, eight of which were spent in China in charge of the China/Asian business.
He said that the reason why he left ICONIQ was that he was inspired by UCAR Chairman & CEO Charles Lu’s entrepreneurial spirit and the unique setup of the integrated company best positioned to address the industry shift from unit-sales based growth to lifetime usage.
That means utilizing your own vehicle when it’s not in use.
“UCAR is what I know to be the company in the car industry that employs the biggest number of professional drivers,” said Lambert, who believes that’s an asset that will make the car you own become a shared vehicle so that you can earn extra money. “To have our cars used for that, if they are managed by professional drivers, why not?”
Removing the inventory risk from dealers, according to Lambert, also changes the OEM dealer relationship, which is quite vicious and force dealers to make desperate decisions in trying to get rid of inventory, resulting in the dilution of brand perception, pricing as well as customer confidence.
“By being able to take care of the inventory risk, we are able to change the relationship with the dealers from this negative pressure to positive pressure,” he said. “This is a big difference. You don’t make desperate decisions. You can have much more dynamic pricing in a transparent way on the platform, which can also be more personal. All of those ideas come from digital expertise and from the back of having the biggest fleet in China.”
UCAR also brings to Borgward its digitalization and connected services expertise, and that DNA can help Borgward jump ahead and catch up with others through partners on the UCAR platform.
“UCAR as a platform attracts a lot of partners, like large technology companies, international tier-1s and OEMs,” said Lambert. “Because UCAR has the biggest fleet in China, it can test, sell, do a lot of things through partnerships which can also help accelerate Borgward’s next products. This is the key, otherwise, we are still a small player. By accelerating with the right partner strategy, we can catch up.”
He stressed that when Borgward left the umbrella of Foton, it lost something, but ultimately gained much more with UCAR.
“Ultimately UCAR and Borgward in the overall constellation of our industry seems relative small, but because of this uniqueness of the model it can represent a quite interesting set up,” said Lambert. “Now what we can propose to OEMs is that they provide technology, we provide support on distribution or mobility services. We complement each other on the two end of the chain and this type of possibility did not exist before.”
Next gen products coming in three years
New retail might be important, but you can’t talk to a manufacturing guy without touching upon products. After all, they are still the lifeblood of any brand.
Lambert told CBU/CAR that the next new product Borgward will launch is an updated BX3 entry-level SUV, which received some last minute changes to cater to young people. But the next generation of products will come in about three years, incorporating the lifetime usage model into the design, rethinking how they will be used.
“The vehicle brand is still very important,” said Lambert commenting on the constellation of brands from OEMs, the mobility space like DiDi and autonomous driving platforms like WAYMO. “Borgward is a vehicle brand, so we need to innovate on the product but we also need to integrate this type of innovation on the business side so that we can bring a product at a better price. We can reposition your pricing strategy, that’s part of what we can do by looking at this integrated player which integrates the mobility platform, fleet management systems and the OEM. We can from the beginning of the design of the car start thinking about this new revenue model.”
Currently Borgward has an engineering team of about 1,100 people and operates a manufacturing facility in Beijing that has been awarded by the Ministry of Industry and Information Technology as an intelligent manufacturing pilot project.
For now, Borgward will be in what Lambert calls a “quiet period” as the integration with UCAR continues and the industry endures a downturn.
“The long-term brand build up including the next generation product will take longer term. This is already on the way,” he said. “It’s not short-term. It’s a long-term thing.”
CASE should be ECSA, electrification window closing
Having worked at Magna Steyr for nearly 12 years, Lambert said he has worked virtually with all the foreign and Chinese OEMs including Chinese EV startups. In fact he had 30 different EV projects on his desk alone back in 2016, and all of them were China related, so it was very interesting for him to see all these startups emerging.
The only thing missing for the Chinese auto industry, according to Lambert, is a strong Chinese brand.
“We need one success story in China,” he said of the Chinese smart EV startup scene. Geely might be one from the traditional Chinese OEM space, but the jury is still out on which startup will emerge as a successful brand.
“Our industry changed so much in the last five years. For the Tesla copies, they’ve come to a stage where they will not only have to fight Tesla but those big traditional OEMs. The window is very small now,” said Lambert.
The CASE acronym, which denotes the connected, autonomous, shared and electrified nature of future smart vehicles, should reordered as ECSA in terms of sequence, according to Lambert.
“We are in the middle of E, but this window will soon come to an end,” he said. “Once every major player has the competitive e-car in their portfolio this is not an area of differentiation any more. The next phase is about C and S. The cars we are designing today should be positioned on the C and S. This is where the key area of differentiation will be.”
Will UCAR and Borgward come out as a winner on this front as an “integrated animal?”