Automotive News Europe — 2024-11-14
Automotive Industry
Zhejiang Geely Holding Group plans to integrate its premium electric-vehicle brand Zeekr with its smart-car marque Lynk & CO in a restructuring aimed at eliminating duplication and saving costs.
The move will see the two brands pool resources such as research and development and software and hardware capabilities.
Zeekr will purchase Volvo Cars’ 30% stake in Lynk & CO and a 20% stake from Geely Holding. The deal will see both Volvo and Geely Holding fully exit from Lynk & CO and values the Chinese-Swedish brand at around 18 bn yuan ($2.5 bn).
Zeekr plans to increase its stake up to 51% with a capital injection, while Geely Automobile Holdings, Geely Holding’s main listed arm, will continue to hold the rest.
Geely Holding Chairman Li Shufu said in a statement on 14 November 2024: “This integration is a key measure for Geely Holding to implement its long-term strategic plans. The coordination and integration of our brands supports their sustainable operations and generates greater synergies that benefit sales, services, revenue, and product competitiveness.”
Geely Auto plans to increase its stake in Zeekr to approximately 62.8% to help increase close collaboration of Geely Auto, Lynk & CO and Zeekr brands, Geely Holding said in the statement. The aim is to improve industrial synergies, hardware and software commonality, supply chain efficiency, after sales service, and accelerating the creation of a stronger global group.
Zeekr and Lynk & CO have some overlap with similar products and pricing, cannabilizing each other’s sales, analysts have said.
Lynk & CO’s two latest EV models, the Z10 and Z20, share the same architecture used by Zeekr’s cars while its gasoline and hybrid models use different platforms developed by Geely and Volvo Cars.
Lynk & CO, which was launched in 2016 and currently has nine models, sold roughly 195,600 vehicles in the first nine months of the year, a 40% increase over the same period a year ago.
By comparison, Zeekr, a three-year-old brand, sold almost 143,000 cars in the first nine months with six models, up 81%.
Management of both car brands will largely remain in place, although Zeekr CEO Andy An will lead the transition and Lynk & CO executives will report to him.
Zeekr to lead on EVs, connected cars
Within the group, Zeekr is expected to lead innovation for electric and connected vehicles, sharing that research with other brands including Lynk & CO and Polestar.
Geely is under pressure in China from increasingly strong domestic rivals such as BYD and Tesla. Best known for its acquisition and revival of Volvo in the 2010s, the group has grown to encompass a sprawling stable of brands from the maker of the London black cabs in the UK to Malaysia’s Proton. It also has joint ventures with partners including Renault and Mercedes-Benz.
The breadth of Geely’s empire has come under criticism in the past and the company is trying to streamline areas of its business.
Announcing third-quarter results on 14 November 2024, Zeekr Chief Financial Officer Jing Yuan said the company’s “disciplined cost control measures, coupled with an ongoing optimization of product structure, economies of scale and technological innovation” helped to increase revenue.
Geely’s Q3 income rose 93% on EV demand
Geely Automobile Holdings continued to increase revenue and profits in the third quarter as the automaker enjoys a boon from its electric vehicle and hybrids segment.
Net income climbed 92% to 2.46 bn yuan ($340 m), while revenue rose 20% to 60.38 bn yuan in the three months ended 30 September 2024, the company said in a statement on 14 November 2024.
Geely sold 1.72 m vehicles through October, up 32% from a year earlier. It’s on track to meet its sales target of 2 m cars for the year and only needs to deliver around 150,000 vehicles per month on average in November and December.
Although still a long way from market leader BYD, which sold half a million EVs and hybrids in October alone, Geely’s transition to plug-in vehicles is showing good progress.
Deliveries of EVs and plug-in hybrids have almost doubled from last year to about 655,000 in the first 10 months of 2024, helped by Zeekr and its mass market Galaxy series. New EVs including the Xingyuan small hatchback and Galaxy E5 crossover have quickly picked up tens of thousands of orders after going on sale.
EU tariffs cloud Geely’s outlook
Exports is another strong growth category, with shipments rising 71% in the first 10 months. However, the outlook is clouded by growing trade measures against Chinese EVs. The EU voted to impose additional tariffs on China-made electric cars, with the duty for Geely group’s EVs set at 18.8%. Other markets including the US, Turkey and Brazil have also introduced, or are mulling, more tariffs or restrictions.
Russia, where Geely is one of the top-selling brands after Western automakers exited the market due to the invasion of Ukraine, is also planning raise to taxes on imported cars. The recycling fees that car producers in Russia must pay to cover potential costs of when the vehicle is scrapped, have been more than doubled for some vehicle segments. This cost will be offset by subsidies for local carmakers, according to Russian media reports.