Chinese car maker is seeking 50% shareholding in Mercedes-Benz’s city car division, according to a British report
27 March 2019

Mercedes-Benz parent company Daimler is in talks to sell up to 50% of its Smart city car division to Chinese car maker Geely, according to a report by the Financial Times.

Quoting three separate sources, the UK-based business newspaper claims the sale of a significant stake in Smart will be confirmed before the start of the 2019 Shanghai motor show in mid-April. The German city car division, established in 1994, has regularly struggled to post a profit due to the slim margins of its limited range of urban-focused models. 

In 2018, Smart contributed just 128,802 of Daimler's 2,310,185 global sales.

The move to secure a stake in Smart by Geely, which became Daimler’s largest shareholder (9.7%) last year, appears set to strengthen ties between the two car makers.

Daimler and Geely have already announced plans for the establishment of a premium ride-hailing service, which is planned to be headquartered in Hangzhou, China.

Recent speculation suggested Daimler was preparing to alter its business activities for Smart under its new chairman, Ola Källenius. This led it to announce it was in talks with “several possible co-operation partners” as it worked to establish plans for the next generation of models, which it has already confirmed will be electric-only.

Spokespeople for both Daimler and Geely declined to comment on the information contained in the Financial Times report.

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The immediate future of Smart has been the subject of intense speculation since Daimler announced chairman Dieter Zetsche would step down from his role in May 2019 after 13 years at the head of the German car maker.

The 65-year-old German has been a strong champion for the city car brand, having been instrumental in its creation and development over the past 25 years.

His successor Källenius is said to hold less enthusiasm for the loss-making division, which currently sells three models: the Fortwo city car, the Fortwo Cabrio and the Forfour supermini.

Mercedes-Benz doesn't quote separate profit results for the Smart brand, but it's thought to have failed to generate a profit in each of the years of its existence. Analyst estimates suggest Smart's losses amount to up to €700 million (£597.7m) annually.

A sale of a significant stake in Smart to Geely might face opposition in Germany, whose government recently ratified a law allowing it block investments above 15% by non-EU companies in what it describes as “sensitive industries”, including defence, energy and automotive.

When Geely secured its stake in Daimler, German politicians questioned to motives of the Chinese company, which is parent to its own Geely Auto brand, LEVCLotus, Lynk&Co, ProtonVolvo and Yuan Cheng Auto.

Read more:

New Smart Forease+ concept gets the speedster treatment

Daimler boss issues Brexit warning after 2018 profit drop

Geely plans £1.5bn investment in Lotus

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Comments
13

27 March 2019
One by one European makers either fully or partly because being bought out by the Chinese.

That's one way to beat the competition, just buy them out.

27 March 2019

Bit sad really, especially since they own a lot of classic brands and ruin them (MG) (Lotus)

27 March 2019
JMax18 wrote:

Bit sad really, especially since they own a lot of classic brands and ruin them (MG) (Lotus)

Who says Geely are going to ruin Lotus, they have announced plans to invest £1.5bn into them, they have also made a great job of owning Volvo and the London Electric Vehicle Company, Geely dont own MG. 

27 March 2019

... to take this pointless, loss making division off their hands

27 March 2019

 Chinese money getting into industry here, is that a bad thing?

28 March 2019

in the long run, yes. The Chinese produce the majority of consumer electronics in the world, they have been financing raw material production in Africa & elsewhere.  If they where a benign nation with good intentions it wouldn't be a worry but they are slowly buying their way into a dominant and potentially controlling position.  You only have to look at Russia and their dominance in the energy market to see how easily the Chinese could hold the West to ransom.

27 March 2019

..the global number one economy, followed by India; Brazil and other south Americam countries will also grow faster than the traditional world leaders. 

 

Perhaps not in my lifetime, I'm 63, but it will happen at somepoint.

27 March 2019

I’m surprised Greeley would be happy with only 50%. The only way I see this working is if they take control of Smart and expand the line up. Given Lync and co aren’t well know rebadging them as Smart cars might make sense and would give Smart some much needed volume.

27 March 2019

Geely seems to be growing into a multi-brand company like the VW group. If so, I'd like to see Volvo as the brand that oversees the company's design language.

Smart, quirkily styled as it is, simply lacks the design finesse of, say, the sadly defunct Toyota iQ 

27 March 2019

Mercedes engines and EQ boost hardware

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