It appears that eight months after Geely chairman Li Shufu purchased a nearly 10% stake in Daimler, synergies between the two companies are starting to form. Bloomberg reports that the Chinese carmaker is in talks with Mercedes-Benz’s parent company to set up a ride-hailing and car-sharing service in China, according to sources familiar with the matter.
One of those people, who asked not to be identified because of the confidential nature of those talks, said that a 50:50 joint venture is under discussion. If true, this entity would be poised to take on market leader Didi Chuxing, which swallowed up Uber’s Chinese business two years ago. Sources said that the talks have yet to be finalised, and spokespeople from the two companies declined to comment.
“Li acquiring the stake in Daimler does have a very clear strategic rationale and industry logic,” said Bill Russo, CEO of Shanghai-based advisory firm Automobility Ltd. “The JV, as the first step of the collaboration, is good evidence of that.”
This is but one of a deluge of automotive companies rushing into the market of new mobility solutions, as Chinese consumers move away from owning vehicles to sharing them. Russo and other analysts claim that such a trend could end nearly three straight decades of growth in the world’s biggest automotive market.
Daimler already has a foothold in the market around the world, with offerings such as ride-sharing service ViaVan, ride-hailing app mytaxi (not to be confused with a similar service by Grab) and car-sharing platform car2go, which agreed to merge with BMW’s DriveNow earlier this year. The company faces stiff competition from the likes of Volkswagen and Toyota, which has also made great strides in this area.
In 2015, Daimler kicked off a pilot for car2go in Chongqing, expanding it to 40 cities in China, but the company said last year that it was seeking a partner to help make the operation profitable, as it struggled to compete with cheaper taxi and ride-hailing options.
While Stuttgart is said to be also considering cars from Denza, its electric vehicle joint venture with BYD, Geely is considered to be a more commercially compatible partner, because it better understands the shared services market and “has a good background for doing business with multinational companies,” Russo said. The duo could offer the widest range of services, “from entry level to premium.”
Daimler CEO Dieter Zetsche said at last week’s Paris Motor Show that discussions with Geely over possible projects were “very constructive,” adding that they look “very promising so far” but declined to specify the areas of collaboration discussed so far.
Li previously said that his investment in Daimler forms the basis for partnerships at a time where traditional manufacturers can no longer battle alone against new startups with fresh technology. All this puts more pressure on Didi, which Bloomberg said is already under unprecedented regulatory supervision in China, and has spent a lot of money on initiatives to fend off rivals such as Meituan Dianping.
If the companies do decide to join forces, there would be a giant web of competing services that need to be untangled. Geely already has two car-sharing services in the form of Care by Volvo and its new future-forward brand Lynk & Co, both of which are plying in the premium sector. It also has the Caocao ride-hailing app that, according to its website, is available in 24 Chinese cities using 23,000 electric vehicles.
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Jerman & mesia kowtow to CHN ..
Mesidis, Geely, P1, VolvoCar, VolvoTrucks, Lotus > all
I hope all the Proton fanboys don’t get excited about this and go about telling Proton is going to get Mercedes AMG technology in their Proton cars and Geely cars.
Mercedes already came out with a statement strongly stating that eventhough Geely owns 10% of Mercedes, it won’t be sharing technologies with Geely at all
A merc is a Merc la. A volvo is a Volvo. If you think your Geely got Merc and Volvo technology, nobody will be buying Merc and Volvo anymore
Mercedes fanboy trying hard to justify?
The fact is Geely will have Mercedes tech in future not sure about p1, maybe later stage.
The ultimate biggest shareholder is the person who call the shots. Cash is king!
Are you saying statement by Daimler Mercedes AG lie or keyboard warrior like you lie?
Next thing you know, they will spin the statement, and the fanboy still do not wake up from delusion and shout lie lie lie.
Lol.. Geely 1.5T engine is co-develop with Volvo. That engine will be in Geely SX11 SUV. We all already know that SX11 will be p1 next product. Clearly p1 will use some Volvo tech in their cars.
Pity our lembap Proton has no vision like Geely and Mercedes. If Proton was not lembap they would have done the same synergy with Grab and Uber also and made their own Ride sharing in Malaysia.
Proton just knows how to beg for bailouts and money from the Government
Mesidis, Geely > all
“The JV, as the first step of the collaboration, is good evidence of that.”
Mercedes, Geely > all
Proton cars shud be used instead.