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GEELY BUYS A 10% STAKE IN MERCEDES-BENZ

Date: 2018-02-28



It's always a bit of a struggle to get your head around just how much lower-budget car manufacturers turn over annually.

It's a staggering figure, even more so in some cases than hi-end luxury car brands. For example, take Tata, who owns both Land Rover and Jaguar.

Geely, the Chinese company behind Volvo, has taken a $9 billion stake in Mercedes-Benz’s parent company, Daimler. As a result, Geely is now Daimler’s largest shareholder with control of just under 10 percent of the huge German car manufacturer.

Geely’s intentions had already been signalled by reports from the financial community that the firm was building its shareholding in Daimler. Now the move has been confirmed in a report to the markets by Daimler itself, in which it states that it welcomes another major investor. The Chinese firm, owned by billionaire Li Shufu, already owns Volvo, Lotus, and Polestar; the performance electric car brand which recently split from Volvo. It also owns Lynk & Co – another electric car marque, targeting younger buyers – as well as flying car firm Terrafugia and the London Electric Vehicle Company, builders of the new London Taxi. The 9.69 percent stake in Daimler taken by Geely is said to signal its desire for technological cooperation, particularly in the electric vehicle field, as well as the kind of economies of scale enjoyed by the VW Group brands.

Mercedes-Benz has already stated its aim of launching 10 different electric vehicles by 2022 under its new EQ brand and is widely thought to be a leader in terms of battery technology and electric car design. On the flip side, it could also open a new path into the Chinese market for Daimler and Mercedes-Benz. Which is by no means an irrational decision made by the company principally because China has the biggest market, demand and interest in the world of the upcoming electric vehicles. Mercedes-Benz sold more cars in China than any other market last year, some 600,000 cars and SUVs, he said. That's twice what they sold in the U.S. In addition to owning one of China's largest auto brands, Zhejiang Geely Holding Group also owns Swedish automaker Volvo Cars and has a stake in Volvo Trucks, which was split from Volvo Cars in 1999.

While companies like Geely continue to develop their own products for the long-term, they see an opportunity to own some winners right now," he said. "Plus they get access to first-class German technology, which has a reputation in China that is second to none.



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