File photo/NBD

Sept. 4 (NBD) -- The news that Borgward will be taken over by China's leading car rental service provider China Auto Rental Ltd. is false, a person-in-charge with the German carmaker said to NBD. 

Acquired by Chinese carmaker Beiqi Foton Motor Co in 2014, Borgward has been seeking new strategic investors since its business negotiations with Guangdong-headquartered conglomerate Baoneng Group ended up with nothing. "Borgward is in talks with a number of partners but nothing definite has reached. The newest progress is estimated to be announced in November," the person-in-charge noted. 

Recurring rumors about the sale of Borgward, to some extent, reveals the fact that its parent company finds it difficult to continue diverting profits from the commercial vehicle business to develop its passenger car business. 

The German brand plays a major part in Beiqi Foton's passenger car business. Data shows that Borgward sold 44,000 cars last year. And in the first half of this year, its sales plummeted by 24.5 percent year over year to 16,300 units. 

Beiqi Foton attributed the declining passenger car sales to its behind-schedule network development and slow expansion in smaller cities, as well as intensified competition from and large promotion of the rivaling brands. 

The stagnancy of the SUV sector also contributed to Borgward's falling sales, as the brand's hit models are all SUVs.

Data shows China sold 632,700 SUVs in July 2017, down 8.24 percent from the same period a year ago. This marks the fourth straight month of declining SUV sales. 

Now, Borgward's top priority is to increase product appeal, improve brand awareness, and expand product lines, the above-mentioned person-in-charge said. After building a solid presence in the SUV market, the brand will expand into the sedan market, including the new-energy vehicle sector. 

But the expansion of product lines comes at a cost. According to Beiqi Foton's report for the first half of 2018, the company netted about 21.6 billion yuan (3.2 billion U.S. dollars) in operating revenue, down 5.54 percent from a year ago. For the same period, Borgward registered a total loss of up to 690 million yuan (101.2 million U.S. dollars) in China and India. 

According to Borgward's "Energy of Twins" strategy, it will work on both gasoline cars and new-energy models.

It seems Beiqi Foton is not in a great position financially to fuel Borgward's ambitious plan itself. This makes it an inevitable choice for the German marque to bring in strategic investors.

Industry insiders noted Beiqi Foton is less likely to sell Borgward to China Auto Rental Ltd., but the car rental service provider will probably become an investor of the German label as it is beefing up efforts to establish a presence in the new-energy vehicle market.  

Email: lansuying@nbd.com.cn