Iconic German brand Borgward's revival stumbles

STUTTGART -- The rebirth of the iconic German brand Borgward with Chinese backers appears to be foundering.

Borgward began selling cars in China and Europe after Foton, the commercial vehicle subsidiary of Chinese state-owned Chinese group BAIC, acquired the rights to the brand in 2014.

Foton hoped the Borgward name would help it to add a successful car business to its truck sales. German names have a good reputation in China and Foton wanted Borgward to compete with the likes of BMW, Mercedes-Benz and Audi.

When Foton began building Borgward cars in a renovated plant in suburban Beijing in 2015, there was talk of annual sales of 800,000 vehicles by 2020. Three new models were to be launched each year.

Borgward started selling the BX7, which is about the size of an Audi Q5, in Europe in 2018 and said it planned to open a factory in Bremen, Germany in 2019 to build 10,000 cars a year. However, the option for the planned site was never taken.

Like many other startup manufacturers Borgward soon hit the hard ground of reality.

The Chinese market became more difficult amid increasing competition from similar start-ups supported by local governments offering dozens of different SUVs. Borgward's models were expensive in comparison.

According to the Chinese manufacturers' association, CAAM, the brand sold more than 30,000 units of the BX 7 in 2017, its first full year of sales. But despite the subsequent launch of the smaller BX 5, sales figures declined steadily thereafter.

Slow demise

Since first-hand information about the company is available neither in Germany nor in China, only pieces of the puzzle of the decline can be put together to form an overall picture.

For example, Borgward's former world headquarters in Stuttgart near the main train station no longer has any lettering indicating the existence of the company. Anyone who tries to reach the office by telephone ends up in the endless loop of an answering machine.

The nearby brand center in a prime city location where Borgward celebrated its German sales start has long been deserted. When the center opened, Borgward executives talked of up to 30 such brand centers in Europe.

Borgward's German homepage is still active, and the models are shown in a promotionally effective way. But the site has not been maintained for a long time. The last entry in the press releases section is from Dec. 14, 2018.

Revival hopes

Borgward entered automotive history with cars such as the beautiful Isabella before the company slid into insolvency in the early 1960s.

Christian Borgward, grandson of the company's founder, Carl F.W. Borgward, announced the brand's revival at the 2015 Geneva auto show. He said the relaunch of Borgward was a childhood dream that was becoming a reality,"

But amid mounting losses Foton sold two-thirds of its shares in Borgward to the Chinese ride-hailing and short-term-rental provider Ucar in early 2019.

The use of Borgward vehicles for Ucar's services initially stabilized sales figures. But from the beginning there were considerable doubts about the new business model.

"I don't understand at all why a supplier like Ucar has to build the cars itself," Jochen Siebert from JSC Automotive, a consultancy specializing in China, told Automobilwoche on the occasion of the takeover.

He was also critical of Ucar boss Lu Zhengyao's idea of selling cars through small stores instead of large car dealerships: "Especially with an unknown brand, it is important to be able to look at and try out models.

After the Ucar acquisition Bruno Lambert, previously President of Magna Steyr Asia, became Borgward's president. Several requests by Automobilwoche for an interview were unsuccessful.

The improvement of Borgward's sales figures after the takeover of Ucar proved to be short-lived.
With the coronavirus pandemic, they have been sinking further and further into the cellar since the beginning of the year.  In the first half of this year Borgward sold just 5,000 vehicles.

Adding to the uncertainty is that Ucar has been dragged into an accounting scandal involving Charles Zhengyao Lu, chairman of its biggest shareholder, Luckin Coffee, a Starbucks rival.

Dealer confidence

At Borgward's European distributor, Autodis Esch/Merschin in Luxembourg, the world is still in order. Autodis Esch/Mersch distributes the BX7 and the smaller BX5 to European markets. Many customers looking for an alternative to Volkswagen, Hyundai or Nissan SUVs cross the border from Germany to visit its Luxembourg dealership.

"We are very satisfied with the business," salesman Andre Lacerda told Automobilwoche.

Autodis Esch/Mersch said it has sold more than 100 Borgward SUVs since summer 2018. Used models have also been doing well. The BX7 can be ordered for 44,200 euros and the BX5 costs 36,200 euros, including a four-year warranty and service. Autodis supplies spare parts to workshops in Europe.

What at first glance looks like a small success story is in reality probably only the last breath in the second death of the brand.

Whether Borgward can be saved is doubtful. The coronavirus pandemic has recently caused the death of many small Chinese brands that had started out with great hopes.

Even once bright stars such as Byton and Nio are now fighting for survival.

However, Autodis's Lacerda said there are no signs that Borgward will end sales in Europe.