Geely has announced another big event.
On November 14, Geely announced that Geely Holding wouldGeely AutomobileTransferred 11.3% of its holdingsVery kryptonianshares. After the transaction is completed, Geely Automobile’s shareholding ratio in Jikrypton will increase to approximately 62.8%.
At the same time, Volvo Cars announced that it will sell its 30% stake in Lynk & Co to Jikrypton. The transaction price is 5.4 billion yuan and is expected to be completed in the first quarter of next year. Upon completion, Jikry will hold 51% of Lynk & Co’s shares, while the remaining 49% of Lynk & Co’s shares will continue to be held by Geely Automobile’s wholly-owned subsidiary.
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Focus rather than shrink
Regarding this adjustment, Gui Shengyue, CEO of Geely Automobile Holdings Co., Ltd., said that as a key measure to implement the strategic framework of the “Taizhou Declaration”, this strategic integration will straighten out equity relationships, reduce related transactions, and eliminate horizontal competition. The complementary platform positioning and R&D capabilities of each brand will help improve the product portfolio and unify the product structure. The deep integration and efficient integration of internal resources will also further reduce costs and increase efficiency, promote the release of economies of scale, and ultimately increase shareholder returns.
The “Taizhou Declaration” was released on September 20. It is another group-level strategic transformation of Geely after the 2007 “Ningbo Declaration” in which it did not fight price wars, fight technology wars, fight brand wars, fight service wars, and fight moral wars. important strategic statement.
The “Taizhou Declaration” mainly mentions five points, namely strategic focus, strategic integration, strategic synergy, strategic stability and strategic talents.
It clearly mentioned that Geely will comprehensively sort out each business segment, clarify business positioning, formulate medium and long-term development goals, adjust and optimize the industrial layout structure, unswervingly promote the deep integration and efficient integration of internal resources, further clarify the positioning of each brand, and rationalize the equity relationships, reduce conflicts of interest and duplication of investment, and improve resource utilization efficiency.
Li Shufu, chairman of Geely Holding Group, said at the time that Geely originally followed the path of strategic expansion. Now it is entering strategic focus, which is strategic integration. Some companies need to be shut down and transferred. The company must be stable and make progress while maintaining stability. Everyone must face the challenges head-on. , continue to “lay the foundation and practice internal strength”.
Capital operation has always been Geely’s strength. Over a long period of time, Geely has relied on this to quickly build a huge automobile empire.
In 2010, Geely made a splash around the world by acquiring 100% of Volvo Cars from Ford for US$1.8 billion.
In 2017, Geely acquired majority stakes in Malaysian national car company Proton and British sports car brand Lotus. Then, in 2018, Geely invested US$9 billion to become the largest single shareholder of Daimler Group, holding 9.69% of the shares.
Now, Geely owns business sectors such as Geely Automobile, Volvo, Lotus, and Jikrypton, covering everything from entry-level to mid-to-high-end.luxurymodels, ranging from gasoline vehicles to pure electric vehicles and other types of power vehicles.
This “casting a wide net” strategy has helped Geely cover almost all market segments. According to the latest sales data released by Geely Automobile, passenger car sales in October were 226,686 units, a year-on-year increase of approximately 28% and a month-on-month increase of over 12%. From January to October, the group’s cumulative sales volume was 1,716,376 vehicles, a year-on-year increase of over 31%, gradually approaching the annual sales target of 2 million vehicles.
Among them, in terms of new energy, Geely Automobile Group’s new energy sales (including Geely brand, Lynk & Co brand, and Jikry brand) in October were 108,722 vehicles, a year-on-year increase of approximately 83% and a month-on-month increase of over 19%, with new energy accounting for 48%. The total sales of new energy vehicles from January to October reached 654,576 vehicles, a year-on-year increase of over 91%, showing a vigorous growth trend.
It can be seen that Geely’s new energy transformation has entered an “accelerated explosive period.” However, this has also caused Geely to face new problems: scattered resources and blurred brand image. Especially when the new energy market is inevitable and the price war becomes increasingly fierce, the problems become more prominent. Therefore, Geely needs a new answer on how to integrate its huge resource pool and improve operating efficiency.
As a key measure to implement the “Taizhou Declaration”, Geely has integrated two mid-to-high-end brands with different positionings. It also hopes to continue to focus and achieve the effect of one plus one greater than two.
Collaborate rather than compete
Why are Lynk & Co and Jikrypton the targets of this integration?
Lynk & Co was established in 2017 as a joint venture between Geely Automobile and Volvo, focusing on youth and personalization. In November 2017, Lynk & Co’s first model, the Lynk & Co 01, was launched with a starting price of 158,800 yuan.
On March 23, 2021, Geely officially announced the establishment of a joint venture company-Jikrypton Intelligent Technology at the 2020 annual financial report meeting. On April 15, the Jikrypton brand was officially released to the public.
In the same month, Ji Krypton 001 was released, which quickly attracted market attention and completed the delivery of 10,000 vehicles in 110 days.
As the twin passenger cars incubated by Geely, according to the original plan, there was a clear positioning and obvious distinction between the two: Lynk & Co focused on fuel vehicles and hybrid vehicles, while Jikrypton focused on the pure electric field.
An Conghui, President of Geely Holding Group and CEO of Jikrypton Intelligent Technology, said that although the two brands (Jikrypton and Lynk & Co) have different positionings, there are overlaps in selling prices. If they are not integrated, competition problems will arise and there will also be problems in operations. Internal contradictions. In addition, the two brands originally shared R&D, sales and other aspects. If they were not integrated, there would be duplication of investment.
According to the third quarter financial report of 2024, from January to October this year, Ji Krypton delivered a total of 167,922 units, a year-on-year increase of 82%. An Conghui said that this merger is a reorganization of the businesses of both parties, which can help Xinji Krypton cover more than 60% of China’s passenger car market, greatly enhance Xinji Krypton’s future growth space, and reduce the risk of horizontal competition.
As for the plans after the merger, An Conghui said at Geely’s 2024 third quarter financial results meeting that Jikrypton and Lynk & Co will maintain a dual-brand strategy, relatively independent and separated from each other. Jikrypton is positioned as a global luxury technology brand, covering the high-end luxury market, while Lynk & Co occupies the global high-end new energy brand, targeting the mid-to-high-end market.
After the merger, Jikrypton and Lynk & Co will conduct comprehensive product sorting and planning to avoid conflicts and form synergy. In the future, Ji Krypton will focus on medium and large cars, while Lynk & Co will focus on small and medium cars.
In terms of energy modes, Lynk & Co’s small cars focus on pure electric vehicles, while mid-sized cars are equipped with hybrids; the Lynk & Co mid-sized cars focus on pure electric vehicles, and large cars are equipped with hybrids.
Although Jikrypton will expand the hybrid form in large vehicles, Jikrypton said that it will not follow Lynk & Co’s hybrid technology, but will independently develop a set of electric hybrid technology suitable for large vehicles.
At the same time, Gan Jiayue also emphasized that Volvo, as a former shareholder of Lynk & Co, will still provide strong support to Lynk & Co’s overseas development, especially in Europe, after selling its shares. and help.
Li Donghui, CEO of Geely Holding Group, also introduced at the performance meeting that through this strategic adjustment, Geely Holding’s internal equity and management structure will become clearer. In the future, Geely Holding, as the major shareholder of Geely Automobile and Volvo, will continue to firmly implement the “Taizhou Declaration”, further strengthen internal coordination, and promote the deep integration and efficient integration of internal resources. As a result, the interests of Geely Holding’s stakeholders will be continuously optimized.
According to reports, Lynk & Co will further explore the European market through in-depth cooperation with Volvo. It is expected that Lynk & Co will sell in 30-50 branches by the end of the year and expand to 100-120 stores next year.
In addition to all brand divisions, Ji Krypton and Lynk & Co will share most of their operations and R&D resources, which will help further reduce costs.
An Conghui predicts that by maximizing collaboration, R&D investment will be reduced by 10%-20%, BOM costs will be reduced by 5%-8%, support and service department expenses will be reduced by 10%-20%, and factory capacity utilization will be increased by 3%- 5%, channel construction will also be highly complementary and significantly reduce costs.
In the current automobile market environment, it is difficult to implement the concept of “having more children and fighting more”. The integration of internal brands is Geely’s positive attempt to transform into a new era. An Conghui is also quite confident about the market after the merger of the two brands, “Currently, the annual sales of Jikrypton and Lynk & Co have reached the level of 500,000 vehicles, and the goal of New Jikrypton is to create a brand with annual sales of 1 million vehicles. High-end new energy vehicle brand.”
(This article was first published on Titanium Media App)
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