By on February 23, 2018

By Siyuwj Geely_assembly_line

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)]

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