Geely itself is no stranger to the European car business, having bought Sweden’s Volvo in 2010.
China’s avid search for footholds in Europe has raised hackles among some politicians in Berlin, Paris and Brussels. Daimler overtook home-grown rival BMW to become the world’s largest luxury carmaker by unit sales in 2016, helped by a broad refresh of its model range and powerful sales growth in China. It reported a 24 per cent leap in net profits last year, to € 10.9 billion, when it presented its annual earnings earlier this month. Geely’s investment arrives as Daimler begins moving away from a classic German conglomerate model that shareholders complain is too rigid. It will become a holding company combining three divisions: financial services, cars and small commercial vehicles and trucks and buses. The Stuttgart firm is unusual among its German peers in lacking a single controlling shareholder, whereas Volkswagen is dominated by the Porsche-Piech clan and BMW by the Quandt-Klatten family. Executives hope the reform will make Daimler more flexible as it adapts to a changing environment for the industry, electrifying a growing share of its range and offering new digital services like ride- or car-sharing. Electric vehicles are especially critical to the massive Chinese market, where Beijing is preparing to impose quotas for emissions-free vehicles on manufacturers. Daimler is making Mercedes-Benz cars for the Chinese market locally via a joint venture with partner BAIC motors. The company told business daily Handelsblatt on Friday that its relationship with BAIC remained solid.
The size of the investment leapfrogs a 6.8 per cent stake in the Stuttgart-based group held by Kuwait and Renault-Nissan’s 3.1 per cent holding. “Daimler is pleased to announced that with Li Shufu it could win another long-term orientated shareholder,” a spokesman for the Stuttgart-based group said. Li had been “convinced by Daimler’s innovation strength, strategy and future potential”, he added. German business media have for weeks reported Li and Geely’s interest in Daimler. But Friday is the first time Li’s stake has crossed the threshold of 3 per cent of stock, requiring a public notification. Two sources familiar with the thinking of Li Shufu told Reuters that his move to accumulate the stake, which has a market value of US$9 billion, was motivated by the “dramatic transformation” under way in the automotive industry.