Geely Holding has announced a significant corporate maneuver, where it will transfer its 11.3% stake in Zeekr to Geely Automobile (0175.HK), thereby increasing Geely Automobile's ownership in Zeekr to approximately 62.8%. Additionally, Volvo Cars plans to sell its 30% stake in Lynk & Co to Zeekr for 5.4 billion yuan, a deal expected to close in the first quarter of next year. This transaction will result in Zeekr holding 51% of Lynk & Co, while the remaining 49% will be retained by a wholly-owned subsidiary of Geely Automobile.
This strategic realignment follows the September 20 release of the "Taizhou Declaration," which outlines Geely's focus on strategic consolidation and synergy. Geely aims to streamline its business units, clarify brand positions, and optimize its industrial layout, seeking to resolve conflicts of interest and minimize redundant investments. The goal is to enhance shareholder value by improving operational efficiency and resource utilization.
Geely's expansion strategy has historically included key acquisitions like the 2010 purchase of Volvo Cars from Ford for $1.8 billion and becoming the largest single shareholder in Daimler with a 9.69% stake for $9 billion in 2018. Under its umbrella, Geely currently manages multiple automotive brands, including Geely Automobile, Volvo, Lotus, and Zeekr, with a diverse portfolio ranging from entry-level to luxury models and fuel-based to electric vehicles.
Geely's sales data for passenger vehicles in October show 226,686 units sold, reflecting a year-on-year increase of 28%. From January to October, cumulative sales reached 1,716,376 units, a 31% rise, closing in on the two million units annual target. Notably, new energy vehicle sales reached 108,722 units in October, representing an 83% year-on-year growth. This segment showed a robust 91% increase year-to-date, highlighting Geely's rapid shift towards new energy solutions.
The restructuring aims to streamline resources, sharpen brand identities, and tackle the internal competition between Lynk & Co and Zeekr, which have overlapping price points despite their distinct market focuses. The realignment will also help resolve duplicated investments and operational conflicts, enhancing both brands' market presence. Going forward, Zeekr will cater to the high-end luxury market, focusing on pure electric vehicles, while Lynk & Co will target mid to high-end markets, offering both compact and medium-sized hybrid and electric vehicles.
Post-merger, Zeekr and Lynk & Co plan comprehensive product reviews to avoid conflicts and enhance collaboration. The synergy is expected to result in significant cost savings, reducing R&D expenses by 10%-20% and production costs by 5%-8%. Efficiency gains are also anticipated in manufacturing and supportive services.
Geely's proactive brand consolidation reflects its strategic pivot from expansion to focus, aligning with foundational principles set out in its strategic declarations. The moves are designed to make Geely more competitive in the evolving automotive landscape, with a target for the newly restructured Zeekr to achieve annual sales of one million units.
