strategic partners Daimler, Geely discussing joint venture in car-sharing

The maker of Mercedes cars is ready to announce the first concrete result of its strategic planning with its new Chinese shareholder.
Have cars, will share.

Chinese automaker Geely and Daimler, the maker of Mercedes-Benz vehicles, are talking about a joint venture for ride-hailing and car-sharing services in China.

Sources told Handelsblatt that the venture, first reported by Bloomberg, is still under discussion. The idea is to take on market leader Didi Chuxing in a sector many see as the future of automobiles as individual ownership fades.

The joint venture would be the first concrete result of strategic talks between the two companies since Geely took a 10-percent stake in Daimler in February. It was clear from the outset that this was a strategic investment on the part of the Chinese company and part of China’s effort to become the global leader in the industry.

Who is in the driver's seat?

The new venture has a certain logic to it, but it will do nothing to alleviate the apprehension investors may feel about who is in the driver’s seat at Daimler. Longtime CEO Dieter Zetsche announced last month that he will retire next year and Ola Källenius will take his place. Last week, longtime CFO Bodo Uebber also quit after being passed over for the top job.

Mr. Zetsche hinted at the Paris Motor Show last week that something concrete was in the works. He called himself “very optimistic” and found the dialogue with Geely “very constructive.” The partnership “offers more opportunities than possible risks,” he said.

Be that as it may, it won’t be Mr. Zetsche or Mr. Uebber, Geely’s two main interlocutors at Daimler, who will be taking that partnership to the next level. Rather, it will be Mr. Källenius and the executive board member responsible for China, Hubertus Troska.

Daimler attaches the utmost importance to another Chinese partner, however. It has been making Mercedes cars in China since 2005 with the government-owned BAIC. Industry sources cautioned Daimler to be careful. “Daimler has to watch out not to cross BAIC,” they said, because China has become the company’s biggest market.

Franz Hubik covers the auto industry and its relationship to government policy. Darrell Delamaide adapted this story into English for Handelsblatt Global. To contact the author: [email protected].