Borgward Returns

Engineering a Comeback

The Borgward BX7. Credit: Borgward
The Borgward BX7.
  • Why it matters

    Why it matters

    Electric cars are gaining popularity, and Borgward plans to gain a foothold in the market using “predatory pricing.”

  • Facts

    Facts

    • Borgward was once Germany’s third largest car manufacturer, but went bankrupt in 1961.
    • The company is relaunching with electric and hybrid SUVs aimed mainly at the Chinese market. Borgward wants to bring its first two models to the German market in 2017.
    • Borgward is a subsidiary of Chinese truck maker Foton, and cars for the European market will be built in China and assembled in Germany.
  • Audio

    Audio

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The Borgward brand has a long history. Once the third largest vehicle manufacturer in Germany, the name hasn’t been seen on a new car since the company went bankrupt in 1961. But it’s about to rise from the ashes.

In its heyday, the Bremen-based carmaker employed more than 20,000 people and sold cars under the Hansa, Goliath, Lloyd and Borgward badges. Founded by charismatic industrialist Carl Borgward, the company built stylish cars that incorporated cutting-edge technology such as pneumatic suspension and anti-roll systems. Some car enthusiasts consider the Isabella to be one of the era’s most beautiful cars, and the P100 was one of the fastest cars in its class. Some models were even exported to the United States.

Those engineering the comeback  have decided to once again do things differently from the competition. True to Mr. Borgward’s legacy, innovation is driving the brand’s revival. But instead of a nimble coupe in the style of the sporty Isabella, Borgward has gone to the other end of the market and is concentrating on sport utility vehicles. Employing electric and hybrid power systems, the automaker aims to break new ground in the SUV sector.

Employing electric and hybrid power systems, the automaker aims to break new ground in the SUV sector.

The man breathing new life into Borgward is Ulrich Walker. After many years working for automaker Daimler in places such as the United States and China, the 64-year-old had already retreated into retirement in a small town near Stuttgart when an executive recruiter asked if he would lead Borgward’s revival. Bored by the life of a pensioner, he jumped at the chance.

Bringing a brand back from the dead and becoming competitive on the global market is a big task. Mr. Walker’s team has a carefully considered strategy and financial backing from Chinese truck manufacturer Foton.

The company wants to bring its first two models to the German market at the start of 2017, but has veered away from plans to bring out models with conventional internal combustion engines.

“We’ll be starting with a hybrid and an all-electric drive,” Mr. Walker said. The decision was made due to the expected tightening of emissions controls.

“They’ll be getting stricter, and with that diesel cars will lose their attractiveness,” said Mr. Walker, adding that the Borgward brand wants to demonstrate that it takes sustainability seriously.

The electric SUV, which will have a 250 kilometer range (156 miles), won’t be expensive, he said.

“We’ll be entering the market with very competitive prices,” Mr. Walker said.

 

Borgward once created legendary cars like this one. Credit: DPA
Borgward is back. Source: DPA
Borgward once created legendary cars like this one. Credit: DPA Source: DPA

 

He sees Borgward’s rivals as established brands such as Volkswagen and Hyundai. But Mr. Walker wants to keep his company lean, and believes his company has an advantage over competitors because it doesn’t have the costs associated with operating a huge factory.

The plan is to build an assembly plant in Germany but make the majority of components in the Foton factory in China, then import the parts by rail. Components such as batteries will be installed in the vehicles once they arrive in Europe, he said. Borgward will also buy electric motors instead of developing its own.

“The components that we need are already on the market at affordable prices,” Mr. Walker said.

European sales are likely to begin in Germany, Switzerland and Austria, and then spread to other European Union countries. Mr. Walker said he anticipates annual sales of about 50,000 vehicles in the medium term, though that number should double with time by broadening the model range.

“Every year we want to bring two new models onto the market,” he said. But the focus will remain on sporty SUVs.

When the revived company’s first two vehicles were unveiled at the Frankfurt International Motor Show in September, the company was ridiculed by the German media. One journalist said there was little that connected these bulky SUVs and the sporty models of the past. Another saw the models as imitations of other brands.

 

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But reactions in the international press might be more important in the end, said Mr. Walker. Although Borgward’s DNA is German, its home turf is China. That’s where parent company Foton is based, and that’s where the factory is located. The automaker plans to produce 250,000 vehicles annually, but that capacity could quickly be doubled, he said.

China and other threshold countries are to be the brand’s most important markets and with that in mind, the focus on the SUV makes sense. That’s the fastest-growing sector of the Chinese automotive market, so the demand would help the revived automaker get a piece of the action. Also, the demand for electric vehicles is growing in Europe, which might bode well for Borgward.

Mr. Walker’s recent announcement that the company would use “predatory pricing” might put the competition under pressure — though only verbally at this point.

 

Martin Murphy is a Handelsblatt editor specializing in the automotive, defence and steel industries. Garrett Hering is an editor at Handelsblatt Global Edition. To contact the authors: murphy@handelsblatt.com

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