With Daimler deal, Geely puts China flag in German heartland

Bloomberg

The car industry is witnessing one of its biggest disruptions since
Karl Benz assembled the first automobile more than a century ago, and Li Shufu wants to play an active part in the revolution.
The founder and chairman of Zhejiang Geely Holding Group Co. has become the top shareholder in Daimler AG, the German company that traces its roots to Benz, and inherits a storied legacy with inventions such as the world’s first diesel car. The $9 billion stake, disclosed and first reported by Bloomberg, represents the biggest investment by a Chinese company in an overseas automaker—and one right in the nerve centers of the global automotive world.
The maneuver by the photographer-turned self-made billionaire comes at a time when battery-powered vehicles and self-driving automobiles are poised to herald a new era. Technology companies like Google and Apple Inc. with vast financial resources are vying for a role in the world of automaking. To survive, traditional manufacturers can no longer go it alone, Li says.

Battery Cars
“Competitors that are challenging the global car industry in the 21st century technologically are not part of the automotive industry today,” Li said. “In order to succeed and seize the technology highland, one has to have friends, partners, and alliances and adapt a new way of thinking in terms of sharing and united strength.”
Li amassed a 9.7 percent holding in Stuttgart-based Daimler through Geely Group, a company owned by the 54-year-old and managed by his carmaker. Daimler and other German carmakers have been investing intensely in the area to stay ahead of tightening regulations and maintain their position as the marketplace moves on from combustion engines. Cooperation with Daimler, on areas such as new-energy vehicles and on-line services, is a core issue, Geely told Bloomberg News.
Li’s closely held Zhejiang Geely Holding Group owns Volvo Cars AB and last year it took an almost $4 billion stake in truckmaker Volvo AB. Geely owns London Taxi and controls British sports-car maker Lotus Cars.
China’s car market has already surpassed the US It’s one area where local companies like Geely and Great Wall Motors Co. are encouraged by the government to go overseas to secure key technologies and access to resources.
Chinese dealmakers in other areas are under intense scrutiny following a debt-fuelled global acquisition spree. HNA Group, the conglomerate that owns stakes in Deutsche Bank AG and Hilton Worldwide Holdings Inc., is unwinding its portfolio of assets.
China’s government temporarily took over Anbang Insurance Group Co., whose buying binge including properties such as Manhattan’s Waldorf Astoria hotel has come to symbolise the overreach of the nation’s debt-laden conglomerates.
Li, whose global empire has more than 70,000 employees, has no such troubles. A surge in Chinese vehicle sales is poised to double profits at his Hong Kong-listed Geely Automobile Holdings Ltd. The company’s shares jumped as much as 8.8 percent Monday, giving it a market value of about $30 billion. The automaker had bank balances and cash of $3.3 billion as of June, according to its most recent financial report.
That should help Li plow money into the emerging world of battery-powered cars and new technologies. Geely, which is China’s largest private automaker by sales, doesn’t have any foreign carmaker as its partner.

BAIC, Daimler to build $1.9bn plant
Bloomberg

BAIC Motor Corp. and Daimler AG plan to build a new factory in China for Mercedes-Benz vehicles to
meet growing demand as the German automaker deepens its ties with the country.
The automakers will co-invest more than $1.9 billion to build the facility, BAIC said in a brief filing to the Hong Kong stock exchange.
“The new factory will manufacture various Mercedes-Benz products in China including new energy electric vehicles” and improve the overall production capacity of the companies’ joint venture, Beijing Benz Automotive.
The announcement comes a day after Li Shufu, the billionaire founder of Zhejiang Geely Holding Group Co., said he had acquired a stake worth about $9 billion in Daimler, marking the biggest investment in a global automobile manufacturer by a Chinese company.