When Foton acquired Borgward in 2014 and relaunched it at the Geneva Motor Show in 2015, it was little known at the time that the Chinese commercial vehicle manufacturer under BAIC Group was behind the resurrection of the iconic German brand Borgward now in its centennial year and once rivaled with Mercedes-Benz.
It was an odd move by Foton, who saw it as its new “ticket” to the passenger vehicle segment after years of attempts trying to crack into it.
The brand had some early success in the Chinese market after its first model BX7 was launched in 2016, selling about 30,000 units that year. Sales increased to nearly 45,000 units in 2017 but dropped again to about 30,000 units in 2018.
In came Jason Yang, a well-known sales & marketing guru in the industry, who repositioned Borgward as a “German brand controlled by Chinese capital” in May 2018 when he became COO and head of sales and tried to resurrect sales just as the Chinese market started to go into reverse mode.
That didn’t work.
Then came the sale.
Foton offloaded Borgward, at least 67 percent of it, at the end of 2018. The surprising suitor was UCAR, one of China’s largest platforms for mobility services including car rental, ride-hailing, ride-sharing and O2O sales. It paid about ¥4.1 billion for the stake.
The acquisition had represented the first time that a mobility platform had invested into an automaker, specifically Beijing Borgward Automotive Co., Ltd., which actually operates one of the best production plants in China in the outskirts of Beijing as far as manufacturing processes are concerned.
The odd marriage puts the resurrection of the Borgward brand into its third-phase, but it might not care so much about sales.
That’s according to newly appointed Borgward Global President Bruno Lambert, whom I recently spoke to in an exclusive interview (see Borgward’s odd marriage with UCAR and their plan to redefine automotive retail in China).
“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,” Lambert told me about what the odd couple is trying to accomplish.
The key words are “lifetime usage model” and “shared mobility,” terms that a traditional car guy like Lambert, who spent early part of this decade in China as head of Magna Steyr Asia/China and most recently CEO of ICONIQ Motors, may not be used to.
It’s also part of the thinking from UCAR Chairman Charles Lu, who has made uncanny investments including Luckin Coffee, one of the hottest newcomers into the coffee chain space that recently IPOed on NASDAQ. Lambert told me that one of the comments that Lu made when they first met was, “I may not know cars, but I know my customers.”
That knowledge obviously comes from years of operating various rental and ride-hailing platforms under the UCAR umbrella, totaling some 400,000 cars and 80 million users, where and how they move, and their habits.
That arsenal combined with Borgward’s manufacturing assets seem to form a strong foundation for a new business model, the success of which is not judged by sales but by how often the car is used.
It will be interesting to see how the two can make owning a car and having it shared at the same time work, and what type of products they will come up with to fit that new business model.
Borgward’s next new car won’t be launched until early next year. But it and UCAR can at least use this quiet period – the market is down anyway – to hash out their plans to transform automotive retail in China.