Geely and Daimler tackle Chinese ride-hailing market
Chinese manufacturer Geely, known in Europe for owning Volvo Cars, Lotus and London Black Cabs, is said to be tightening its collaboration with Daimler. According to Bloomberg, the Chinese and German giants are conducting negotiations to establish a joint venture that will offer ride hailing services in China and compete with Didi Chuxing.
Geely, that has already a 10% stake in Daimler, is eager to obtain its share of China’s growing mobility business; the ride hailing volume is projected to be close to 8 billion rides in 2018.
Competition in the starting blocks
A Geely-Daimler joint venture will not be the only Didi competitor on the Chinese market. Many OEMs have been investing in or are collaborating with ride hailing companies.
Toyota is partnering up with Grab, the Singaporean Uber competitor, by installing tracking and data registration devices in Grab cars in South-East Asia. A Toyota-Softbank collaboration has also been announced, beginning of October; this joint venture will develop ride hailing and self-driving technologies. Reminder: competing with Didi can happen outside of the Chinese border.
Daimler is in a good place when it comes to mobility solutions. It has successfully rolled out Car2Go and previously Car2Share in China and is, from an operational point of view but not from a profit point of view, ready for growth. In addition, Mercedes is a popular brand in China and has its own EV brand, Denza, that can play a major role in the further development of mobility solutions.
With Geely however, Daimler China has the number 3 OEM in China in its team. The OEM has also built up expertise in ride hailing with its application Caocao, active in 24 cities with 23,000 EVs. Geely understands the Chinese market better than any other player, but is, on top of that, used to working with non-Chinese stakeholders.
It is becoming increasingly evident that China’s exponential car sales is slowing down. Not only because of regulations or market insecurity, but also because the Chinese consumer and the local OEMs are about to reach the tipping point between ownership and usership.
Geely and Daimler seem to be doing the right thing at the right time.