Written by / Wang Xin
Edited / Mao Shiyang
Due to financial exhaustion, inability to pay off debts due, and insufficient assets to pay off all debts, on April 8, Beiqi Foton Automobile Co., Ltd. (stock code: 600166) issued an announcement that Beijing Borgward Automobile Co., Ltd. (hereinafter referred to as "Borgward") held an extraordinary general meeting of shareholders on April 8, 2022, and resolved to apply for bankruptcy liquidation in accordance with the law.
The announcement shows that Borgward has suffered serious losses since its establishment, and in order to repay historical debts, the assets will be paid off or mortgaged, coupled with the impact of the failure of the actual controller to lead the war, the capital chain is broken, financing difficulties, and the debt has been in a serious crisis, and production has not been resumed so far.
Beiqi Foton said that the company will make a large impairment provision for Borgward's borrowings, current arrears, guarantee matters and the recovery of the company's equity in Beijing Borgward, which is expected to affect the total profit in 2021 - about 4.704 billion yuan. In addition, considering the company's recognition of investment income due to its holding of equity in Beijing Borgward, it is expected to affect the total profit in 2021 - about 5.326 billion yuan.
Image source/Visual China
As early as January 27 this year, Foton Motor issued an announcement that Borgward could not continue to maintain operations due to the exhaustion of funds and had entered a state of suspension. With the stagnation of production and operation, the assets stored in the Miyun factory of Borgward were seized by the court as a whole, and there was no possibility of introducing new funds to resume production in the short term. In addition, Borgward's external liabilities are basically overdue and insolvent.
In fact, on June 21 last year, Borgward Automobile was rumored to be about to enter bankruptcy proceedings. Although Borgward Did Not Respond, the outside world was not surprised by the news. The news of Borgward's bankruptcy is not a big deal in the eyes of dealers, and Borgward's life and death have long been irrelevant to them.
According to the statistics of the China Association of Automobile Manufacturers, the cumulative output of Beijing Borgward (SUV) in 2021 was zero, and the cumulative sales volume was 3612 units, down 58.5% year-on-year. From 2016 to 2021, beijing Borgward production and sales reached the highest value of 54528 vehicles in 2019, and plummeted to 8703 vehicles in 2020, and the total sales in the past 6 years were greater than the total output, and the inventory of the warehouse was 7612.
"Finance and Economics" Weekly called the contact number of some of the dealers on the official website of Borgward, and many store phones could not be answered, and even the dialed stores also said that they had already withdrawn from the network.
"The store is almost yellow, Borgward's products are not good, we have not sold new cars for almost a year, but after-sales maintenance is still there, if you repair the car, you can only pay for yourself." A Borgward brand dealer told Caijing Tianxia Weekly. Although Borgward Automobile has officially filed for bankruptcy liquidation, for hundreds of thousands of consumers who have paid for "moral feelings", vehicle after-sales maintenance is undoubtedly the focus of attention.
On April 8, on the home page of Borgward Automobile's official website, an "Open Letter to the Majority of Borgward Car Owners" was very eye-catching, which admitted that Borgward's debt crisis was facing bankruptcy, and Borgward Automotive Technology (Beijing) Co., Ltd. (hereinafter referred to as Borgward) will fully undertake the after-sales service responsibility of Borgward Automobile and continue to provide maintenance services and spare parts supply for car owners in accordance with the original after-sales service policy.
"Borgward is a re-established company with the support of relevant authorities specifically for the maintenance and supply of spare parts for Borgward Cars aftermarket vehicles. Car owners can still go to Borgover authorized outlets for maintenance, and more than 130 outlets have been opened so far. A person in charge of Borgward told Caijing Weekly, "But now all stores don't sell new cars." ”
On some car sales platforms, Borgward's inventory car is currently priced at 60,000 yuan, while in 2016 the car was still priced at 180,000 yuan. Some dealers say, "All the Borgward parts I have sold are scrapped."
Beiqi Foton's indigestible "taste of virtue"
The Borgward brand was founded in Germany in 1919 and went bankrupt in 1961. In 2014, in order to develop passenger cars, Beiqi Foton Motor (600166. SH) spent 5 million euros from Borgward AG to acquire the Borgward brand, which has been bankrupt for half a century, under the blue ocean of Chinese SUVs, trying to leverage the residual value of Borgward's Ashkenazi genes to weave its own passenger car dreams.
Borgward on the road to resurrection is not without a "highlight moment". In 2015, under the leadership of Beiqi Foton, Borgward Automobile was officially established. At that time, Borgward prided itself on being the "Top Four of The germans", shaping itself into a German brand comparable to Mercedes-Benz, BMW and Audi, trying to directly create a high-end image of the brand and gain market share.
Image source/Visual China
Launch is the pinnacle. At that year's Frankfurt Motor Show, Borgward unveiled its first SUV model, the BX7. Or Chinese have a natural liking and preference for German cars, in April 2016, Borgward BX7 was sought after by the market as soon as it was launched. People who are new to Borgward are "brainwashed" by "BBBA" and Made in Germany 4.0.
At that time, BX sold 5,000 vehicles in July, and nearly 30,000 units were sold in its first year. In 2016 and 2017, Borgward sold 30,000 and 44,000 units, respectively. However, from 2018 onwards, the competition in the SUV track intensified, and Borgward, which lacked the core competitiveness of brands and products, began to collapse, and sales fell to 33,000 vehicles, down a quarter from 2017.
"In the hands of Beiqi Foton, Borgward Automobile has long lost its German technical heritage and heritage, and is just an empty shell and brand." Beiqi Foton can only use its own technology to revitalize the Borgward brand, from the car system research and development to the chassis three, in fact, it is 'Beiqi Foton Manufacturing'. At this time, Borgward is actually an out-and-out independent brand. An industry insider introduced.
In the eyes of some people in the automotive industry, Borgward is like Qoros, just a new brand that integrates the elite of the global automotive industry to rebuild. In the eyes of ordinary consumers, Borgward wears the cloak of "German blood", but in essence, it is an independent passenger car brand incubated by the commercial vehicle company Beiqi Foton - since the bankruptcy in 1961, Borgward's product and technology research and development has been discontinued for more than 50 years, and after the "resurrection", the technology accumulation and brand accumulation need to be reconstructed.
After the "pseudo-German" and "pseudo-luxury brands" without core technologies were identified, coupled with the frequent complaints of excessive fuel consumption, battery failure, engine noise, leakage of antifreeze, engine burning oil, turning abnormal sound, after-sales service attitude and other issues under the "lifetime warranty", the sales volume of Borgward Automobile has gone downhill.
In 2017, Borgward BX July sales fell to about 3,000 units, and the sales of the newly launched BX5 were not satisfactory, while former Borgward executives fled. To make matters worse, since the launch of Borgward's first model, the BX7, in 2016, Beiqi Foton and Borgward have entered a state of loss.
Due to the sluggish sales and serious losses, the brand that he bought and built with his own money did not bring gain, and in desperation, Beiqi Foton could only choose to sell Borgward.
Why does BAIC "not want to see" Borgward?
Note that Borgward's own performance is only half of the story of the car brand that is facing obsolescence. The other half depends on the dominant party of Borgward at different times.
The main reason for the sale of Borgward is that its own efficiency is not good, coupled with the fact that passenger cars are relatively expensive projects, beiqi Foton commercial vehicle profits have been unable to support its development, and it is necessary to introduce strategic investors.
For Borgward, Beiqi Foton, which is mainly engaged in commercial vehicles, has not accumulated in passenger cars, and it cannot give Borgward enough support in both channels and product research and development. Baic Group holds more than 27% of the shares of Baiqi Foton and is the largest shareholder of the latter. However, BAIC, which has a stronger accumulation in passenger cars, has not given a helping hand.
Image source/Visual China
At that time, BAIC Group was planning to return to A-shares, and Borgward once became a "stumbling block". Caijing Tianxia Weekly learned that the passenger car business of BAIC Group was included in the "BAIC Motor Co., Ltd. (hereinafter referred to as BAIC Motor)", which belonged to different business segments from Baiqi Foton, but with the emergence of Borgward, BEIQI Foton and BAIC Motor had the risk of competition in the same industry.
Some insiders told Caijing Tianxia Weekly that BAIC did not want Foton to get involved in passenger cars, not to mention that Borgward's own business has not improved much. At that time, there were two solutions discussed within BAIC: one was to merge BAIC Motor into Foton Motor, a listed company, and the other was to spin off Borgward from BAIC Foton, which BAIC chose.
During this time, Borgward was once again in an awkward situation. On the one hand, Wang Jinyu, the former general manager of Beiqi Foton Automobile, who led the landing of Beiqi Foton Passenger Car, resigned, and Borgward's future was uncertain; on the other hand, Borgward's brand attributes were questioned and marketing was deadlocked. At this time, Borgward needs to create a new concept and quickly get out of the quagmire.
At this time, Yang Song, who is known as a "marketing ghost" in the automotive circle, was pushed to the forefront. At the beginning of 2018, he stressed at the first press conference after becoming the president of Borgward Automobile Group that Borgward's brand attributes are German brands controlled by Chinese capital, and vigorously exaggerated Borgward's automotive engineer culture.
However, in the next few months, the measures and marketing military regulations mentioned in this 3-hour-long press conference did not allow Borgward to reverse the loss situation. It is reported that Yang Song's joining Borgward is a proposal for intended investors, Borgward will serve as a "touchstone" for BAIC's mixed reform, and Yang Song's purpose of taking charge of Borgward is that the top management of BAIC Group intends to divest Borgward from Beiqi Foton.
On the one hand, the investment is too large but there is no return, on the other hand, its own business has also suffered a heavy blow, in 2018, Beiqi Foton Automobile suffered the largest loss in history, the revenue hit a five-year record low, and the net loss reached 3.575 billion.
According to Foton Motor's financial report, from 2016 to 2018, Borgward Automobile sold 30,000 units, 44,000 units and 33,000 units, with revenue of 4.539 billion yuan, 5.76 billion yuan and 3.06 billion yuan, and net losses of 484 million yuan, 985 million yuan and 2.54 billion yuan, respectively, with a cumulative loss of 4.014 billion yuan in three years.
Borgward has become a hot potato. In October 2018, Beiqi Foton listed and transferred 67% of the equity of Borgward. Two months later, UCAR acquired a 67% stake in Borgward in the name of Changsheng Xingye entity, and completed the formal delivery in March 2019 with a transaction amount of 4.1 billion yuan. As of now, UCAR holds 75.21% of the shares of Beijing Borgward, and Foton Motor holds 24.79% of the shares.
According to incomplete statistics, from 2014 to the sale of Borgward, Beiqi Foton Automobile spent up to 10 billion yuan on Borgward. Beiqi Foton, which has stripped Borgward, is rapidly returning to blood. In 2019, Beiqi Foton turned a loss into a profit, with a net profit of 190 million yuan, compared with 150 million yuan in 2020.
In 2021, Beiqi Foton announced that the company's performance will turn from profit to loss, and the net profit attributable to the shareholders of the listed company is expected to be about -5.035 billion yuan, but if the company's total profit in 2021 is about 355 million yuan, if the company's total profit in 2021 is about 355 million yuan.
Borgward eventually becomes an "outcast"
Lu Zhengyao, who was the chairman of UCAR and Borgward, did not expect that Borgward, which he regarded as the "most important piece of the puzzle", would also collapse rapidly under the chain reaction of Luckin Coffee's explosion.
Before the acquisition of Borgward, Lu Zhengyao's concept of "Shenzhou Automobile Ecosystem" has basically taken shape, and Shenzhou Car Rental, Shenzhou Special Car, And Shenzhou Car Buy have built a closed loop of Shenzhou car rental, online car, second-hand car, and auto finance business. The acquisition of Borgward became an important part of the automotive business ecology, and Lu Zhengyao hoped to provide car sources for its car rental companies through Borgward Automobile, and Borgward, as a car-making platform, could also produce other brands of cars.
Undoubtedly, the car manufacturing involved in Borgward is indeed the key to leveraging the financial, second-hand car, rental and sales business of UCAR, and through the big net of this automobile territory, the entire "Shenzhou system" began to move the whole body.
"Finance World" Weekly saw from the financial report of The Hong Kong listed company Shenzhou Car Rental that the procurement volume of the largest supplier of Shenzhou Car Rental accounted for 60.53% of its total procurement volume in 2019, and the largest supplier was Borgward. This explains why Borgward Auto was able to peak sales in 2019.
In January 2019, Lu Zhengyao declared that it is necessary to fully realize the separation of production and marketing, reshape channels, and reconstruct automobile consumption through "industrial chain transformation and platform empowerment," thus launching the new retail platform of Borgward Automobile. At this time, it had just acquired Borgward for only one month.
Lu Zhengyao's plan seems to be perfect - through the national network of Shenzhou Car Rental, Borgward has launched services such as in-depth test drive, zero down payment car purchase, and no reason to return the car within 90 days, but it did not think that on the channel side, it triggered widespread dissatisfaction throughout the dealer network. Since 2019, many dealers who have followed Borgward's dealers since the "Futian Era" have asked to withdraw from the network.
After 2020, affected by luckin coffee's financial fraud, the "Shenzhou system" began to collapse. Shenzhou Car Rental's performance plummeted in 2020 and had to reduce procurement, and Borgward's sales plummeted. Shenzhou car rental was sold, and the sales of Borgward Automobile, which is highly dependent on Shenzhou car rental, also fell sharply by 84% in the year.
If the first gold lord Beiqi Foton was dragged down by Borgward, then the second gold lord Lu Zhengyao's Shenzhou Ucar eventually pushed Borgward into the abyss. In fact, Borgward began to be taken over by Lu Zhengyao, and there were no competitive new products to the market, laying the groundwork for the subsequent decline.
"Bankruptcy doesn't mean it's the end. Borgward has dual production qualifications for traditional cars and new energy vehicles, and the production line of 180,000 (vehicle) production capacity of Miyun Factory is still relatively valuable, which is still very attractive to those companies that are new to the field of car manufacturing. An industry insider told The Weekly Of Finance.
In April 2021, it was rumored that Xiaomi had intended to take Borgward into its pocket, but because Xiaomi's bid was much lower than Lu Zhengyao's psychological expectations, the negotiations reached a stalemate. However, analysts believe that the relationship between Borgward's equity and creditor's rights is very chaotic, and Xiaomi has no reason to go to Borgward again.
This trip to muddy waters.