(Yicai Global) June 23 -- German carmaker Borgward is not going bankrupt, according to several insiders at the firm which has been rumored to be about to get liquidated.

Customer service personnel at Borgward said to Yicai Global on the phone that the person had not received a bankruptcy notice. 

Borgward is operating normally, an insider at the firm which is controlled by chauffeur service provider Ucar told Yicai Global. A person at Beiqi Foton Motor, a shareholder of the carmaker, also denied any news of imminent liquidation.

Market rumors claimed otherwise. Borgward is about to enter administration, which will be officially announced as early as July, several Chinese media outlets reported earlier.

Bad News: Investment Poison 

Lu Zhengyao, the actual controller of Borgward’s largest shareholder Ucar, is also the actual controller of Luckin Coffee, which was ejected from the Nasdaq a year ago due to a financial scandal.

These types of problems are easy to transmit. Companies controlled by Lu will inevitably be affected by the coffee chain's financial fraud, Cao He, chairman of ZhongRong Venture Capital Fund Management, said in an interview with Yicai Global. 

"The impact on Borgward is minor, but it is difficult to find new strategic investors in the current market environment,” Cao added. Borgward is still building its brand and needs a lot of investment, the chairman added.

The performance of companies helmed by Lu is declining, an automotive analyst said. It is a challenge for Borgward to perform well because new investors are hard to find, the person said, adding that it is possible to go bankrupt if there are no investors.

Established in 1919, Borgward was formerly Germany’s third-largest carmaker before a debt crisis in 1961. But the old European brand was revived by Chinese firms. Ucar acquired a 67 percent stake in Borgward for CNY4.1 billion (USD633 million) in March 2019 from the previous Chinese owner, Beiqi Foton.

Following the chauffeur firm's acquisition, Borgward's sales jumped to 54,500 vehicles in 2019. But 2020 was hard as sales slid to 8,740 units amid challenges in integrating Ucar's rental network with Borgward's sales channels.

Editor: Emmi Laine, Xiao Yi