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Is a seemingly unstoppable Chinese automaker slowly amassing a significant ownership stake in Germany’s Daimler AG? That’s what sources tell Bloomberg.
According to the news outlet, sources claim Geely Auto Group, which owns the Volvo, Lotus, and the mysterious Lynk & Co. car brands, is steadily acquiring a $9.2 billion stake in the German giant. That would give the Chinese a near 10-percent stake in the maker of Mercedes-Benz vehicles.
Are we witnessing the birth of a new alliance?
If true, what does Geely hope to gain from this share buy-up? Probably not cash dividends, as Geely reportedly doubled its net income last year amid a 63-percent sales increase of its assorted brands. Operating profits at Volvo Cars rose 28 percent to an all-time record in 2017.
While the Hangzhou, China-based automaker has not made anything public, sources tell Bloomberg that the acquisition of shares occured over a period of several weeks. An announcement could come within days, they said. This jibes with earlier reports describing a stealthy accumulation of Daimler stock by the Chinese company.
Earlier this month, sources told Reuters that Geely had purchased a significant number of shares in Daimler, perhaps totalling close to a 3-percent stake. The sources, who claimed Geely hoped to partner on electric vehicle technology, were unsure as to whether Geely would increase its stake. In November, Reuters reported on sources who claimed Daimler turned down a 5-percent ownership offer from Geely, which hoped to achieve it through a discounted share placement.
It seems, instead, that Geely just went out and bought regular shares. At the time of the report, Daimler CEO Dieter Zetsche said he had no knowledge of any shares purchased by Geely.
“Geely has opted mainly to show their seriousness and to impress on Daimler folks that they are not going away,” one of the sources told Reuters.
China’s electric vehicle mandate has turned the fledgling segment into one of the country’s hottest, leaving its domestic automakers scrambling to outdo each other as a burgeoning middle class snaps up vehicles left and right. A partnership on electric vehicle technology, which sources claim Geely wants, would quickly give the company an edge — without the expenditure of big R&D dollars.
In an idea situation, sources claim, Geely and Daimler would build EVs through a joint venture in Wuhan, capital of China’s Hubei province. This might not interest Daimler, however, as it already has a production partnership with China’s BAIC Motor Corp.
[Image: Siyuwj/Wikimedia Commons (CC BY-SA 3.0)]
There goes the neighborhood…
(I kid I kid…)
If I’m not mistaken, Big Al from Oz predicted this in Quatrain 943.
China’s current account surplus is hundreds of billions of dollars. they gotta spend that money somewhere.
As a country, they can only buy so much Rolexes, Ferraris and US treasury bonds.
Here is the solution for the piece of crap CLA – replace the MB star with a Geely badge and sell it $16,999 out the door (the price it is really worth).
You took the words right out of my mouth.
I met Geely founder Li Shufu at the Detroit auto show in 2007. A lot of people laughed at him saying he wanted to be “the Henry Ford of China”, but even then it seemed to me that he had a clue how the industry worked. Geely is one of the few Chinese automakers that’s privately owned. Most of the others are tied one way or another to the communist regime. Some of his factories are partly owned by local authorities, not unlike Saxony’s investment in VW, but I’m pretty sure that he’s not in business with the Beijing gov’t or the People’s Liberation Army, which has interests in a lot of Chinese industry.
PLA = Hauwei I don’t blame the US government for pressuring ATT, Verizon, etc… to not deal with them. Notice that Lenovo(Motorola) wasn’t mentioned.
The sad part is they seem to make some pretty reliable stuff as long as you don’t need the warranty to kick in.
Which means he must constantly be looking over his shoulder to see if the Communist Party of China is out to get him, as just happened with Chinese insurance giant Anbang:
https://www.bloomberg.com/news/articles/2018-02-23/china-regulators-to-take-control-of-anbang-insurance-for-1-year-jdz9l5fp
Seems more like he’s the William Durant of China.
Let’s hope that Geely does to Daimler what Daimler did to Chrysler. Suck it dry of funds, talents, ideas, etc. and dump the carcass at the side of the road!
If it happens I hope it happens under DR Zs watch. But, he’s 64 and I’m not up the ages rules for the top guy. He may not be there long enough for that to happen.
Chrysler did get some good tech form Daimler, but I generally agree with Polishdon. It was very one sided. Daimler took a lot more from Chrysler than Chrysler got form Daimler.
Stay the hell away from BMW Geely.
Oh dear. Now Daimler will be forced to discount the hell out of its models, since Mercedes-Benz will no longer be perceived as a premium brand.
and that is exactly correct
Really? Doesn’t seem to have happened with Volvo, which has been (pun fully intended) on a roll.
Funny how the new CLA bears so much resemblance to the Geely GC9. Now we know why.
Seem just yesterday Germans would say, “communisten? Feuer!”.
What’s up with the silly comments? Daimler has had many foreign stakeholders in the past, such as the State of Kuwait and more recently the Emirate of Abu Dhabi. Both of these are the biggest stakeholders of the company.
Do either of these entities make crappy Chinese cars?
This man is now the single largest shareholder. That’s why its news and why the comments have skewed the way they have.
Stay the hell away from BMW Geely.
What is wrong with Mercedes management, don’t they know not to dance with the Devil? Stupid asses.