Chinese online travel giant Trip.com is in talks to buy Car Inc., a car rental firm with deep connections to Luckin Coffee, local media reported, citing people with knowledge of the matter. Lu Zhengyao is the chairman of both Luckin Coffee and Car Inc.
Why it matters: China’s online travel market is gradually creeping back as the pandemic shows signs of leveling off in the country. While travel giants are gearing up for the pent-up travel demands, Car Inc. saw its shares more than halved since Luckin’s sales fraud announcement last Thursday. It may offer a good buy for Trip.com to expand its car rental business.
- Shares of Car Inc. traded down since last Thursday amid concerns over the firm’s ties with Luckin Coffee, also chaired by Car Inc. board chairman Lu Zhengyao.
- Lu and Luckin chief executive Zhiya Qian have handed over shares in the embattled Chinese beverage chain to investment banks after a $518 million loan default.
- Trip.com, an OTA giant, was among the worst-hit tech giants during Covid-19 outbreak. The company expects its Q1 revenue to fall by as much as half as a result of travel suspensions.
- Car rental services may see a surge because cars are deemed as safer (in Chinese) means of public transportation. Experts expect the epidemic to last till next year.
Details: Trip.com is in discussion with Car Inc. for a possible acquisition of the Hong Kong-listed company, an anonymous source told local media.
- With the acquisition, Trip.com plans to merge the business of Car Inc. with eHi, a car rental partner of Trip.com, according to the report.
- The two parties haven’t come to agreements on details of the case, the report added.
- Trip.com representative declined to comment on the news when contacted by TechNode today.
- Luckin’s Lu Zhengyao is considering resigning as chairman of Car Inc., a move to distance himself from the car rental company, thus to convince investors that the group is independent of Luckin.
Context: On April 2, Luckin Coffee admitted to sales fraud that involves an estimated RMB 2.2 billion ($310 million), sending its shares down 75.6% on the day.
- Liu Jian, Luckin’s chief operating officer who’s been accused of being responsible for Luckin fraud, worked at Car between 2008 and 2018 before he joined Luckin in May 2018.
- Trip.com has seen a rise in the overseas car rental business in late 2019. The company expected the number of customers using its overseas car rental services would have tripled year-on-year by the end of 2019 winter holiday season.