Geely Holding Chairman Li Shufu (left) and Daimler CEO Dieter Zetsche at the signing of a strategic cooperation for Smart Photo: Courtesy of Geely Holding
China's Geely and Germany's Daimler on Thursday signed an agreement to set up a 50-50 joint venture for global operation of the latter's electric brand known as smart, a move that will promote smart's sales in the China market and turn around its loss-making operations, a Chinese analyst said.
Under the agreement, a new generation of smart electric models will be assembled at a new purpose-built electric car factory in China with global sales due to begin in 2022, a statement posted on Geely's official website showed.
Wu Shuocheng, a Shanghai-based independent automobile analyst, told the Global Times on Thursday that making the vehicles in China means the price will likely drop. That could boost sales, given that the brand already has achieved recognition in China.
The companies' joint prospects are promising, based on this agreement and an earlier deal involving car-hailing, Wu said.
Geely shares fell 0.4 percent to 14.8 yuan ($2.2) on Thursday. But while stock investors seemed unimpressed with the deal, Wu said that Geely may help Daimler to turn the loss-making smart brand into a profitable venture.
"Geely achieved that after buying Volvo. Now, it's likely to do the same thing," Wu added.
In October 2018, Daimler and Geely formed a 50-50 joint venture (JV) to explore the car-sharing market in China. The JV will provide ride-hailing services in several Chinese cities using premium vehicles, including Mercedes-Benz vehicles, according to information on Geely's official website.
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