China’s largest car rental agent halts trading in Hong Kong, as shares plunge amid scandal at chairman’s associate company
- Car Inc’s shares drop 54.4 per cent to HK$1.96 before trading is suspended
- Disgraced Luckin executive worked at rental company and related firm for a decade before joining in 2018
Shares of Car Inc, China’s largest car rental company, plunged by as much as 68.4 per cent in Hong Kong on Friday before trading was suspended at 10.14am, on suspicions it was linked with Luckin Coffee, which announced on Thursday that Liu Jian, its chief operating officer, and several employees had fabricated transactions worth 2.2 billion yuan (US$310.4 million) last year.
Liu worked at Car and UCar Inc, a ride-hailing service provider that holds a substantial stake in the rental company, between 2008 and 2018, before he joined Luckin in May, 2018. Car denied any links and said it was completely independent of the coffee unicorn. Its shares were down 54.4 per cent at HK$1.96 before trading was halted.
“Luckin Coffee and Car are completely independent of each other. They do not have any equity or business relationship,” Song Yifan, Car’s chief executive, told investors on Friday. “In terms of corporate governance, management, organisation system and internal control, we are not related to Luckin Coffee.”
Charles Zhengyao Lu, the Beijing-based car rental company’s founder, however, is a chairman and angel investor in Luckin. He also founded and is chairman of UCar.
Shares of Xiamen-based Luckin, touted as a rival to Starbucks, sank 75.6 per cent Thursday overnight on the Nasdaq following the announcement about Liu.
“Since he left, our business development has undergone many new changes, our employee team and operations are very different from years ago, ” Song said. Liu changed after he left Car, she said.