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    Foton puts out feelers to bring fresh investors into Borgward

    By Li Fusheng | China Daily | Updated: 2018-10-15 13:29
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    Borgward's stand attracts many visitors at an auto show in Guangzhou, Guangdong province. [Photo provided to China Daily]

    Chinese automaker Foton Motor is seeking investors for Borgward, a move expected to offer the much-needed cash to the German brand it purchased in 2014 and allow itself to better focus on its commercial vehicle operations.

    Foton designs and manufactures trucks, buses, sport utility vehicles and agricultural machinery.

    In a statement last week, the Shanghai-listed carmaker announced its plan to transfer 67 percent in equity in its wholly owned Borgward "for the sake of its long-term development".

    Foton said the move was carefully considered, following rounds of discussions at board level about the proposal since late 2017.

    Its statement showed that Borgward's total assets stood at 11.81 billion yuan ($1.74 billion) by the end of August, with debt of 6.67 billion yuan. Borgward sold 44,000 vehicles last year.

    Foton has not decided on the price for the planned equity transfer, nor has it revealed any possible buyers so far.

    Jason Yang, president of Borgward, said the company welcomes new investors, which would make it vigorous financially and help create better prospects for the group.

    The equity transfer, when completed, will be a win-win situation, according to industry analysts.

    They said a smaller stake in Borgward would mean a smaller financial burden for Foton, and enable it to better focus on its efforts to consolidate its position in the commercial vehicle segment, as outlined in its development plan.

    Analysts said that for serious equity investors, Borgward is a good proposition. Among others, it has the authorization from the government to produce both gas powered cars and new energy vehicles.

    China is tightening its control on the licenses to produce new energy vehicles, which has proved a headache for many startups.

    Even more attractive for investors is Borgward's complete design and development team, as well as its efficient production system, analysts said.

    The carmaker has more than 2,000 engineers and technicians from 12 countries, accounting for some 40 percent of its staff. Some of them previously held senior posts at leading carmakers including GM, BMW and Rolls-Royce. It also owns a manufacturing facility in Beijing, which the carmaker said is built to similar standards as Audi plants.

    "We not only build cars but also deliver a sense of safety," Yang said in a previous interview.

    The plant, with an annual capacity of 100,000 vehicles, now produces five SUV models, with the latest introduced earlier this year.

    Borgward is the one to benefit most in the deal, with the investment to fulfill its blueprint outlined at its brand day in May.

    It plans to introduce at least two new models a year and is expected to produce sedans within three years.

    The sales network has been streamlined as well, and Yang said he expects Borgward to introduce new business strategies with the help of new investors. Borgward announced plans in September to make inroads into the US market in 2021 as part of its global expansion strategy. It has been exporting its vehicles since 2016.

    Borgward is stepping up efforts in new technology as well. It has showcased its artificial intelligence-based technology for autonomous driving in the United States, the latest result of its research and development facility in the Silicon Valley.

    The technology is to be incorporated into Borgward production cars within three years.

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