CEO of Geely-owned Volvo Loses Board Seat after Geely Buys Daimler 9.7% Stake
Swedish truck maker AB Volvo dropped the chief executive of Volvo Cars from its board after Chinese billionaire Li Shufu, founder and chairman of Zhejiang Geely Holding Group, bought a 9.7 per cent stake in German car manufacturer Daimler.
The move is the latest sign that the global auto industry is ratcheting up pressure on Geely, which owns Volvo Cars and has a 8.2 per cent stake in AB Volvo, to reveal its global strategy amid active asset buying around the world.
“The reason Hakan Samuelsson is not proposed for re-election is the announcement that Geely Group has become the largest shareholder of the German vehicle manufacturer Daimler, one of the Volvo Group’s major competitors,” the company said in a statement.
Geely spent about US$9 billion on the stake in Daimler – parent of German marque Mercedes-Benz – in the open market, according to a stock market filing on the weekend.
The share purchase is being viewed as a step up in efforts by Li to implement Geely’s “go global” strategy, as the Chinese carmaker continues to marry European styling and technology with its manufacturing capability and the vast potential of the mainland car market.
“From the engineering perspective, a marriage with Daimler is no easy job since Geely and the German brand are not in the same class,” said Peter Chen, a Shanghai-based engineer with US components maker TRW. “Geely needs to take a step-by-step approach to assimilate technologies and gel with Daimler’s management.”
It is unclear how Geely will consolidate the tie-up with Daimler. On Tuesday, it did not comment on whether it would seek membership to Daimler’s board. Elsewhere, it was reported Geely was keen to access Daimler’s electric car battery technology, and hoped to set up an electric car joint venture with the German auto giant in Wuhan, capital of Hubei province.
“The share buying is obviously a result of Li Shufu’s dream of building the best cars, in his youth,” said Yale Zhang, the managing director of consultancy Automotive Foresight. “It remains to be seen how Geely will leverage the ownership to reach other deals.”
Also on the weekend, BAIC Motor, Daimler’s Chinese partner, said the two companies will invest a combined US$1.9 billion to build a new factory on the mainland, with the aim of building various Mercedes-Benz cars, including clean energy vehicles.
Bloomberg reported that Li met Dieter Zetsche, Daimler’s chief executive, at the company’s headquarters in Stuttgart on Monday.
Li, 54, bought Volvo Cars in 2010 from Ford Motor Company, taking the first step in internationalising Geely’s businesses. The company also has a 49.9 per cent stake in Malaysian carmaker Proton and a 51 per cent stake in iconic British sports car marque Lotus Cars.
Late last year, it also bought US start-up Terrafugia, which claims it will develop a flying car within the next two years. (www.chinatrucks.com)
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