Detroit Bureau on Twitter

Geely’s Li Shufu Says Partnerships Key to Auto Success

Team up or get swallowed up.

by on Apr.17, 2018

Geely Chairman Li Khufu purchased 9.7% of Daimler AG for $9.2 billion.

Geely owner Li Shufu urged Daimler AG, in which he recently became one of the largest shareholders, to consider further strategic partnerships.

Global News!

Li Shufu, who is also the owner of Volvo, recently became a major shareholder of Daimler after acquiring a 9.69 % stake in the Stuttgart-based company.

In an opinion piece written for German newspaper Frankfurter Allgemeine Zeitung, Li said that traditional carmakers could only survive far-reaching structural change in the automotive industry through enhanced cooperation.

“We must actively assess the possibility of comprehensive alliances, instead of hiding from reality by sticking our heads in the sand,” Li wrote. He added that “any legally-feasible bilateral and multilateral cooperation of mutual benefit” needed to be “discussed.”

(Geely Chairman shaking up auto industry. Click Here for the story.)

The opinion piece was widely interpreted by the German media as a sign that the new Daimler shareholder would play an active role in shaping the company’s future. Earlier, Li already added Volvo to his portfolio of vehicle brands and helped the struggling Swedish carmaker achieve a commercial turn-around.

Daimler AG's Dieter Zetsche discusses the company's future during its annual shareholders meeting.

Li said, according to the Chinese Xinhua News Agency, carmakers willing to face significant challenges, such as a need to pivot to self-driving and electric-powered technologies, could still benefit in the long-run. Companies “ready to unite to create digital platforms,” which can be used cooperatively by their diverse brands, would have a “recipe for success” in a “more and more embattled industry.”

He also emphasized the current transition phase would be a critical juncture for carmakers as they struggled to juggle competing goals of profitability and sustainability. Nevertheless, he expressed optimism that it would be possible to “use global economies of scale and reduce risks” on the one hand, while ensuring the “independence of brands” and “autonomy of management” on the other.

Carmakers need to “wake up” to make the switch to a business model based more on sharing technology to generate acceptable returns in future. “Those companies sticking to silos will be swallowed up by the few remaining giants,” Li said. “Those who’ll bundle their shared strengths will win out in the future.”

(Click Here for more about Geely’s founder buying 9.7% of Daimler AG.)

Companies could keep increasing dividends, as Daimler just did to shareholders in parallel to creating greater product differentiation and respecting intellectual property rights.

Since it was founded by Li in 1986, Geely Automobiles has grown into one of the leading carmakers in China and its continued growth could make it one of the largest in the world, Besides Volvo, it has also taken control of the British engineering firm Lotus and the London Taxi Co., which is building electric taxis.

Last month, Li unveiled of plans to start making his Lynk & Co. mid-market brand in Europe next year, the first Chinese vehicles to be built outside their home market. Lynk, which started sales in China last year, will produce the 01 sport-utility vehicle at Volvo’s plant in Ghent, Belgium.

Daimler CEO Dieter Zetsche said earlier this month the investment of Li as a positive development. “I’d like to start by saying our talks with Li Shufu have been very positive” Zetsche said. “He wants to have a long-term investment with Daimler and he supports our successful strategy,” said Zetsche, future collaboration with Li Shufu’s automotive empire, which includes Geely, the Chinese company he founded, and Volvo.

(To see more about Daimler AG’s CEO Zetsche’s talks about future with new investor, Click Here.)

“China is our most important market. In our future discussions of the automobile business in China, we will be able to include our biggest shareholder. We will also explore the question of whether there are additional opportunities cooperation,” Zetsche told the estimated 6,000 shareholders gathered for the meeting.

Tags: , , , , , , , , ,

Leave a Reply