Photo/Zhang Jian

Dec.29 (NBD) -- Chinese car maker Beiqi Foton Motor Co., Ltd. (Foton Motor) announced Friday that a transferee, a Xiamen-based consulting company, is to take over 67 percent stake in its subsidiary Beijing Borgward Automobile Co., Ltd (Beijing Borgward) for 3.973 billion yuan (578.9 million U.S. dollars).

It is noticed the transferee was newly founded in early December this year."Chauffeured car service provider UCAR might be behind the transferee and such practice may be related to share holding and earnings reports matters," said Cao He, chairman of a Beijing-based auto investment and management company, to NBD.

According to a filing previously announced by Foton Motor, apart from 3.973 billion yuan, the transferee has to pay off 4.27-billion-yuan debts for Borgward within three years.

To facilitate the transaction, UCAR offered a guarantee for the transferee with a value of no more than 2.4 billion yuan (349.7 million U.S. dollars), according to a filing previously released by UCAR.

The assumption of real buyer behind the scene seems to be more reasonable. On the Friday afternoon, Beijing Borgward struck a strategic partnership with UCAR to expand auto retail business. Under the agreement, the two parties will jointly set up a sales unit, which will be led by CEO of UCAR's O2O automobile e-commerce platform Shenzhou Maimaiche.

Borgward is not doing well in recent years. Statistics show that it sold only 28,100 cars during the first ten months of 2018, down 19.19 percent year on year. As of August 31 this year, the company reported a combined loss of 1.649 billion yuan (240.3 million U.S. dollars).

UCAR is confident in its partnership with Beijing Borgward and the car service provider has long had the ambition to manufacturing cars. Last June, UCAR established a 10-billion-yuan (1.5-billion-U.S. dollars) industry fund and led the financing round of 2.2 billion yuan (320.6 million U.S. dollars) in electric car startup Xiaopeng Motors.

This July, CAR Inc., the car rental arm of UCAR, became the largest shareholder of FDG Electric Vehicles Limited.

The recent tie-up with Beijing Borgward will be a mutual-beneficial move for these two parties. It is noticed that CAR Inc is the largest single car purchasers in China and spent 4.5 billion yuan (655.7 million U.S. dollars) on car purchasing in 2017 alone.

But it is still too early to tell that how UCAR and Beijing Borgward will develop the car sales models through the latter's car rental business and car-selling platform.

Email: tanyuhan@nbd.com.cn.cn