China rescues heritage German car-maker. A sign of things to come?
Jared Zaugg is author of the newly released book on classic sports and racing cars, "Gentlemen, Start Your Engines!" The views expressed are his own.
It's considered the most prestigious motor show in the world and it's also the largest. This year attendance at the Internationale Automobil-Ausstellung, (IAA), in Frankfurt, Germany, exceeded 350,000 people. There were over 1,100 exhibitors from nearly 40 countries representing the automotive industry. Everyone from Ferrari and Bugatti to Ford and Toyota were there putting their best foot forward, showing the world their vision of tomorrow.
And everyone was there with China on its mind. Already representing the largest automotive market -- and producer -- in the world with a growth potential that dwarfs that of America, Europe and Japan combined, China is where the automakers are understandably looking.
Just last year vehicle production in China reached nearly 24-million units, making it the largest output by any nation at any time in history. These staggering numbers combined with exponential growth estimates from both a domestic production and import standpoint make China the focus of the future.
Not only that but China's increased efforts to combat excessive pollution (Beijing and Shanghai already have mandatory Euro III emission standards) and offset energy challenges have resulted in China also placing a real focus on ever more efficient gasoline-powered and hybrid and electric cars.
With stricter standards, a considerable domestic output, a rising middle class, giant growth potential and vast private investment, China is also looking outside its borders.
No longer content to invite the major automakers to set up shop in China (Chrysler, VW, Mercedes-Benz, Toyota, Ford, Honda, BMW and many more all have joint-venture manufacturing in China), the Chinese are actively going abroad to purchase technology, IP and manufacturing platforms.
Fisker, for example, the California-based luxury sports hybrid that went out of business, was recently bought by a Chinese firm. So too was Segway, the little battery-powered personal transporter. At nearly every end of the spectrum, from electric urban "scooters" to heavy equipment, the Chinese are acquiring or partnering at an accelerated rate.
An interesting example of this is Borgward. Formerly a Bremen-based German automobile manufacturer, Borgward created trucks and "affordable premium" cars for about 30 years from the late 1920s to the early 1960s. In fact, at one point, in the 1950s, Borgward was the third largest automaker in Germany. Now after a half-century hiatus Borgward is back, having been reborn with the help of Chinese investors and is unveiling its first model this year.
Representing the new global paradigm, Borgward is considered a German company as its products are designed at its headquarters in Germany but manufactured in China. While some critics refer to this as a Chinese company veiled as German, the same could be said of most leading brands today whether their products are made in China or whether their companies are controlled by the Chinese or both.
Examples include Apple, whose products are designed in California but made in China, MG and Rover automobiles that are made in Britain but controlled by Chinese, and divisions of IBM and Motorola that are both owned and manufactured by the Chinese.
These critiques, however, don't seem to affect the optimistic Borgward group headed by CEO Ulrich Walker and his team of German directors. After all, they may be revealing their new model here in Europe but their target is unabashedly Asia.
Adhering to Borgward's traditional philosophy of "affordable premium" and capitalizing on China's insatiable appetite for SUVs, Borgward is going after China's rapidly rising middle class with, initially, a single model -- the BX7 hybrid. Similar in many respects to Audi's Q5 hybrid, Borgward's BX7 is an attractive crossover-style vehicle packed with amenities, offering impressive performance and positioned more affordably than rivals.
What's most newsworthy, however, is Borgward's stated goal of producing an incredible 800,000 units by the year 2020. While this number may seem extraordinary, given the projections in China and the fact that Borgward is controlled by China's Foton group (already manufacturers of an array of automobiles in a joint venture with Daimler) this number -- over three-quarters of a million vehicles in just four years -- may actually be attainable.
So while the rock stars of this year's IAA were wowing the crowds with sensational products and shows, like Mercedes-Benz whose astounding concept car was unveiled in a manner rivaling that of a Las Vegas production (complete with DJs, lasers, high-tech choreography and theatrics on an epic scale), brands like Borgward were quietly and confidently announcing their plans for the future. Though their products may not cause the crowds to gasp, in Borgward's case it represents a revival of epic, if uniquely Eastern, proportions.