China’s Zhejiang-based Geely Holdings Group and German auto giant Daimler are said to be in talks on cooperation in providing car-sharing and ride-hailing services in China. Geely acquired a 9.69 percent in Daimler in February this year, becoming its largest sole shareholder. It was then widely believed by industry insiders and analysts that Geely is not simply moving for financial investment but rather exploring potentials for future cooperation.
What now is under discussion is a 50-50 joint venture which, if approved works, is expected to stir the industry, according to sources familiar with the matter. Talks have not been finalized and both sides declined to comment.
The venture would set itself the goal of expanding market for new types of transport services, which so far has been dominated by tech giants including Didi Chuxing and Uber Technologies Inc.
Daimler and its rivals, including Volkswagen AG and Toyota Motor are scrambling for a foothold in China’s transport services. China, the world’s largest auto market, has seen growth over the past thirty years, but the growth may end as new modes of transport services are changing the way consumers use cars, to be specific, they are shifting from owning to sharing, according to Russo.
Geely chairman Li Shufu said the investment laid the groundwork for partnership in such an era when new entrants with new technologies can pose a threat to traditional manufacturers if they play alone. Dieter Zetsche, CEO of Daimler, also said last week at the Paris auto show scheduled for October 2 to 14, that Daimler’s talks with Geely over potential cooperation are constructive, but he didn’t specify, according to Bloomberg.
The two giants are moving at the right moment to talk about a ride-hailing joint-venture when dominator Didi Chuxing is in a terrible fix to ferret out and rectify its safety loopholes after two female passengers were killed by its registered drivers respectively in May and August when using Didi’s carpooling service. Competition may work to regulate the market.
However, Geely stepped into ride-hailing in early 2016, and has launched the service app named Caocao, raising the question of how to put Caocao in the right place when the new joint venture is created.
Over the course of 2010-2018, Geely has amassed a stock of auto brands, including Volvo, Lotus, Black Cabs. It has become world’s third-largest carmaker with a 44 percent year-on-year increase in sales, hitting 767,000 during the period of Jan to June (trailing only Volkswagen AG and General Motors) and 54 percent increase in net profit. Its market share climbs from 5 percent in 2017 to 6.4 percent in first half of 2018.