Chinese car firm Geely is quietly becoming a major global player in the car industry, through a series of clever investments in mildly distressed car brands.
Geely’s skill is spotting firms with an inherent brand value, which it can reinvigorate with a dose of investment, a dash of guidance and a refreshingly hands-off approach.
It bought Volvo from Ford in 2011 and has reinvigorated the Swedish car firm, turning it into a major force in the premium SUV market. The purchase of the London Taxi Company (now rebranded the London EV Company) has given it a solid commercial vehicle platform. The 2017 purchase of Lotus has secured Geely a flagship sports car brand with a rich history.
Taking a 50% share in Smart from Mercedes-Benz parent firm Daimler is another shrewd move – and crucially it’s one that works for both firms. Smart has struggled in recent years, with Daimler intending to reinvent it as an electric-only city car brand.
But such a move requires plenty of investment, with no guarantee of a return. In a joint venture, Daimler now gets to share the burden of that investment. While Mercedes-Benz will lead the styling of future Smart cars, they’ll be built by Geely in China.
Daimler is already heavily investing in the ramp-up for the Mercedes-Benz EQ electric car range – and it can now focus more resources on more profitable premium-level electric cars. A plant currently used to make Smart models will be retooled to make a Mercedes-Benz EQ model, for example.
Geely gets to promote a brand with European heritage – and, crucially, the credibility of Mercedes-Benz involvement – which could give it a crucial edge in the huge Chinese market for small electric cars.
While Smart isn’t exactly in rude health, it still has a brand identity and credibility in Europe that Geely can build on – exactly as it has done in the past with Volvo, and is doing now with Lotus.
A shrewd investment by Geely, then, and crucially one that also works for Daimler. The best partnerships are those in which both sides stand to benefit – and this is one of those.