Car Inc may soon have no more formal ties to Charles Lu, founder of Luckin, Car Inc, and Ucar.

China’s Beijing Automotive Group (BAIC) is seeking to buy a stake of up to 21.26% in Car Inc, a Hong Kong-listed car rental company formed by Luckin Coffee chairman Charles Lu. Shares of Car Inc surged 24.4% to close at HKD 2.24 ($0.29) on Monday.

READ MORE: Charles Lu: The man behind Luckin and China’s fastest IPOs

Why it matters: The deal would mean state-backed BAIC is taking over the China’s biggest car rental company in which Luckin Coffee chairman Charles Lu is the controlling shareholder.

Details: Ucar, a Shenzhen-listed auto service group controlled by Charles Lu, on May 31 reached a non-binding agreement with BAIC to buy up to 21.26% of Car Inc, according to a regulatory filing on Monday. Ucar is currently the largest shareholder in Car Inc, with a 21.26% stake.

  • Meanwhile, Car Inc said Amber Gem Holdings, a major shareholder who owns 10.11%, has agreed to terminate its stock acquisition plan with Ucar.
  • Amber Gem Holdings, a subsidiary of private equity fund Warburg Pincus, on April 16 made an agreement with Ucar to buy a total of 17.11% shares of Car Inc in two separate transactions. Warburg has been a backer of Car Inc since 2012.
  • Ucar currently owns 21.26% of the company as the biggest shareholder after transferring 4.65% shares to Amber Gem Holdings in the first tranche on April 16, according to a company filing.
  • If the deal is completed between BAIC and Ucar, BAIC could become the biggest shareholder of Car Inc as Ucar is basically exiting its investment.
  • Car Inc on Monday warned that Ucar and BAIC are still under negotiation.

What’s in a Ucar? Charles Lu formed Car Inc, a car rental company in Beijing in 2007

  • It later grew into the country’s biggest car rental chain with a fleet of 27,000 cars in 2010 and went public in Hong Kong in 2014.
  • Lu expanded his reach in Chinese mobility market with the establishment of Ucar, a ride-hailing startup in 2015.
  • Ucar was later restructured into an auto service group that includes car rental, auto sales, ride-hailing, and auto financial services.
  • Ucar was listed in Shenzhen in July 2016, and raised their stake in Car In from 12.12% to 29.36% in Car Inc with a market value of $326 million two years later.

Context: BAIC, one of Daimler’s major manufacturing partner in China, on April 13 announced “a comprehensive strategic partnership” with Ucar in car procurement, online auto sales, and car financial services.

  • Car Inc recorded net loss of RMB 188 million in the first quarter of this year, compared with a net profit of RMB 390 million for the same period last year. Total revenue dropped 28.4% year-on-year to around RMB 1.33 billion.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: or Twitter: @yushan_shen