Geely, Daimler in talks for ride-hailing service
Chinese billionaire Li Shufu may have found the glue to start binding together the automobile assets he has assembled across the globe - by creating an entirely new business altogether.
Li's Zhejiang Geely Holding Group Co is in talks with Daimler AG - in which Li took an almost 10 percent stake earlier this year - to set up ride-hailing and car-sharing services in China, according to people familiar with the matter. Under discussion is a 50-50 venture that would take on market leader Didi Chuxing, said one of the people, who asked not to be identified because the deliberations are confidential.
The venture would target an expanding market for the new types of transport services that has been dominated so far by tech companies like Didi and Uber Technologies Inc. Automakers are scrambling to establish themselves in new technologies, as car-sharing and autonomous driving threaten to upend the traditional model of vehicle ownership.
"Li acquiring the stake in Daimler does have a very clear strategic rationale and industry logic," said Bill Russo, CEO of Shanghai-based advisory firm Automobility Ltd. "The JV, as the first step of the collaboration, is good evidence of that."
In the past eight years, Geely has amassed a stable of auto brands, including Volvo Cars, British sports-car maker Lotus, London Black Cabs - and the largest stake in Daimler, the maker of Mercedes-Benz.
Daimler and rivals from Volkswagen AG to Toyota Motor Corp are seeking a foothold in the transport services that are changing the way consumers use vehicles. China, the world's biggest auto market, may end its near-three-decade growth partly because consumers are moving from owning to sharing, according to Russo and other analysts.
Daimler has had more success in mobility than most, gaining traction with ride-pooling service ViaVan, ride-sharing app MyTaxi and car-sharing platform Car2Go, which is being merged with BMW AG's DriveNow.
Toyota, the world's most valuable carmaker, is also moving fast. The company has snapped up stakes in Uber and Southeast Asian ride-hailing provider Grab, and has said it is in talks to work with Didi in China. Toyota is also expanding its car-sharing services in Europe and last week teamed up with SoftBank Group Corp for a venture that will develop ride-hailing and self-driving car technologies.
The discussions between Daimler and Geely haven't been finalized, according to the people. Spokesmen for Stuttgart-based Daimler and Geely, based in Hangzhou, declined to comment.
A venture would deepen a relationship that started with Li acquiring almost 10 percent of Daimler earlier this year.
The reported partnership came amid renewed mounting competition in China's ride-hailing market. The leading player Didi Chuxing has been busy ferreting out and rectifying the safety loopholes and problems after a number of accidents.
Daimler is considering using cars from its electric-vehicle brand Denza, its joint venture with Warren Buffett-backed BYD Co, the people said.
In China, Daimler started a pilot car-sharing offer in the southwestern city of Chongqing in 2015, extending it to around 40 Chinese cities. Last year, Daimler said it was seeking a partner to help make the venture profitable as it struggled from comparatively cheap taxi and ride-hailing options.
Bloomberg - China Daily
