Automotive Mercedes-Benz E-Class 2021

Published on March 26th, 2020 | by Daniel Sherman Fernandez

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Will Geely Buy Mercedes-Benz during COVID-19 Crisis

It might just happen and we could see Geely being the biggest automotive company in the world.

With a global car market slowdown and a current low share price, Daimler, the parent of Mercedes-Benz is a ‘sitting duck’ in the stock market for Geely to take over.

In 2018, Geely purchased a 9.7% stake in Daimler AG, owner of the Mercedes-Benz brand. In September 2019, Geely led a round of private funding for Volocopter that raised USD55 million for the company. Volocopter’s other private investors also include Daimler AG which owns a stake in the company. 

In January 2020, Zhejiang Geely Holding Group Co Ltd and Mercedes-Benz said they would each invest USD388.77 million in a China-based venture to build “premium and intelligent electrified” vehicles under the ‘smart’ car brand.

Lynk & Co

The coronavirus is hitting the low and the high profile businesses in every single country. Germany is trying hard to contain it and with its biggest automotive industries running to a slow down whilst China is back on its feet and its car factories and also other factories starting back their production, the cash rich Zhejiang Geely Holding Group could easily buy up Mercedes-Benz. 

BHPetrol-Kaya-Raya-Contest

Forecasts by financial analysts at the Norddeutsche Landesbank see a drop in automotive production and sales of ten to twenty percent compared to the previous year. In a March 2020 report, even mergers with various possible partners are an option. 

The financial report also states: “In view of the corona virus crisis, but also with a view to the disruptive times, Daimler may have had time to think about a merger, especially since the valuations of companies are currently relatively low.” The market capitalization of Daimler is currently only around 25 billion euros, which brings the group within reach of financially strong investors from China. Geely owner Li Shufu recently assumed interest in Daimler. 

Smart forfour

As an alternative to the Chinese partner, analysts also see a possible German vs German partnership happening with BMW with which co-operation’s already exist” and even a possible German-French-Japanese model which is already in progress with Renault and Infiniti.

Given the dynamic situation, it is difficult to predict whether Daimler boss Ola Källenius can still afford to work around the German government state financial aid. Even if the carmaker does not want to make use of government aid, it is certain that the group will at least make use of the relaxed conditions regarding short-time work which in way that was also what Ola Källenius said in his conversation with the Handelsblatt reporter. Maybe government support is needed to ward off ‘hostile’ foreign takeovers. Just imagine, the inventor of the automobile owned by a Chinese car company will be difficult for any German national to accept.

BHPetrol-Kaya-Raya-Contest

The coronavirus will leave its mark in years to come even in the automotive industry, which is already shaken by its attack on the global.

While factory production and consumer sales in China are gradually starting up again, the worse for Europe is yet to be seen and it will take months before any normal business cycle will be restarted. Also, let’s not forget the collapse of stock prices so massively with this crisis will leave large established car manufacturers becoming dangerously cheap and easy to be bought up by Chinese cash rich companies.

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