Shanghai (Gasgoo)- China-based automaker Beiqi Foton Motor Co., Ltd. (Foton Motor) announced that it plans to transfer the 67% stake in Beijing Borgward Automobile Co., Ltd (Beijing Borgward). After the transaction completes, Foton Motor will hold the balance of 33% stake in Beijing Borgward, who will no longer be included in the former's scope of consolidation of consolidated financial statements.
In 2014, Foton Motor purchased Borgward, a defunct German car brand that had closed in 1961, and started to locally produce the cars afterwards. Its first model, the BX7 SUV, hit the market in 2016. For a time its monthly sales hit over 5,000 units, but Borgward soon lost its appeal in China.
The automaker tried to save the sales performance by launching the BX5 SUV in 2017, however, it didn’t work well because the monthly sales of the SUV model failed to exceed 2,000 units since it hit the market. In May this year, Borgward rolled out the BX6 “coupe SUV” and the BXi7 electric SUV, while their sales performances still remain a question considering the relatively high prices and less competitive brand influences.
According to the China Passenger Car Association (CPCA), Borgward delivered around 44,000 vehicles in total last year. From January to July this year, the automaker's cumulative sales slumped 23.3% year on year to 18,996 units.
Beijing Borgward attained annual revenues of RMB5.096 billion last year, while suffered a net profit loss up to RMB275 million with the sales falling. For the first eight months of 2018, the company's revenues amounted to RMB2.267 billion. By the end of August 30, Beijing Borgward has suffered a net profit loss up to RMB1.649 billion in total according to the consolidated financial statements.
Foton Motor announced on June 27 that it agreed to increase capital in Beijing Borgward with an additional investment of RMB 4.409 billion. After the capital increase, Borgward's aggregate registered capital would be increased to RMB7.40952 billion from RMB3 billion. It is reported that the investment will be used to introduce new strategic investors in the future.
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