FAW Car buys stake in Mobike subsidiary

FAW Car Co is entering the car-sharing segment by acquiring a 10 percent stake in bike-sharing giant Mobike's newly launched car-sharing unit Mobike Chuxing Technology Co.

The Chinese carmaker said it had signed an acquisition deal over the weekend in a filing to the Shenzhen Stock Exchange on Monday. It did not disclose details about the acquisition cost or the time-frame for the deal, but said the investment is unlikely to have a significant impact on its earnings in 2018.

Mobike Chuxing was set up last December with a registered capital of 20 million yuan ($3.07 million) in Southwest China's Guizhou province as an attempt by Mobike to seek new growth points in the market outside its core bike-sharing business.

Mobike, which has more than 200 million users, said via a newly added car-rental feature users will be able to unlock, park, lock cars and make payments by using the same app they use to rent shared bikes.

With the strategic investment, FAW Car will develop and provide electric cars for Mobike Chuxing, and the joint venture will share with the carmaker its experience in shared mobility operations as well as user statistics.

"Our cooperation with Mobike Chuxing is helpful for us to push forward developments in mobility, seize historic opportunities as the automotive industry is transforming and upgrading itself, and thus improve our ability in sustainable development," said FAW Car.

It has also reached an agreement to produce cars for electric carmaker Sitech, another shareholder of Mobike Chuxing, to make better use of its production capacity.

FAW Car is one of the many carmakers that are making inroads into the car rental business in China as the growth of the country's car market is slowing down and shared mobility is changing people's lifestyles.

"Though public transportation and private vehicles remain the leading transportation mode in mega cities in China, shared mobility is already transforming how urban residents move around their cities," said Xu Qian, who is from consulting firm Alix-Partners' automotive practice.