Produced by | Bullet view of finance
Author | Homer
Edit the | Egg total
American editor | Qian Qian
In the second half of 2022, many car companies are talking about new products and technologies, and the launch of new cars is one after another, and the sound of joint car manufacturing is higher than wave. Geely Automobile, known as the "domestic first brother", is unusually "quiet". In addition to quietly launching a new Lotus in September, there are basically no bright products or technology releases, and there is no competition for various sales lists.
However, just around the National Day in 2022, Geely, who seemed to be unknown, suddenly told his new car building story in a high-profile manner.
1. Geely's chess game
On September 30, Geely Holding announced the completion of the acquisition of a 7.60% stake in Aston Martin Lagonda International Holdings, a British ultra-luxury brand.
Photo / Geely Holding Group official website
On October 8, the Financial Times said: "Renault CEO will hold a meeting with Nissan CEO over the weekend to discuss Renault's plan to sell its internal combustion engine (fuel engine) business to Geely Holding." On November 11, Renault CEO Luca de Mayo visited the South Korean plant jointly operated by Geely and said that he hoped to carry out a comprehensive restructuring of the alliance so that Renault could focus on electric vehicles.
Renault's emphasis on electric vehicles and alienation from fuel engines are closely related to Geely. Not to mention that the destination of the Renault CEO's trip to South Korea is a factory that cooperates with Geely, and even the potential successor for the sale of internal combustion engines is Geely. The reason why the meeting with Nissan CEO is involved is based on Renault's partnership with Nissan.
In 1999, when Nissan did not do well, Renault bought a 36.8% stake in Nissan for $5.4 billion and became Nissan's largest shareholder, and later Renault formed alliances with Nissan and Mitsubishi. Today, Renault and Nissan have cooperated for 23 years, and technology has been shared in key areas of some products.
If Renault successfully sells the internal combustion engine to Geely, it will mean that Nissan will transfer its engine technology to rival Geely.
Once Renault successfully sells its internal combustion engine business to Geely, the market share of Nissan, a major manufacturer of fuel vehicles, will be eroded, and Geely, which has Renault's fuel engine technology, may become the biggest winner behind this sale.
Photo / Renault China's official Weibo
In just half a month, Geely began to buy Renault's internal combustion engine after completing the acquisition of Aston Martin's shares. Although Geely has not launched any new products in the past six months, for Geely, acquiring a century-old luxury brand is no less than recreating a new brand; The intention to renault fuel engine may change the entire Geely Automobile's product line.
Of course, some people may think that Geely's acquisition of Aston Martin or Renault is ultimately stuck in the era of fuel vehicles, and the recipients are some companies with operational problems. Then, the cooperation between Geely, Intel and NVIDIA before the National Day will be the future intelligent direction.
On September 26, Intel's Mobileye and Geely Holding announced that they will further expand their cooperation in advanced driver assistance systems (ADAS) and autonomous vehicle technology. Following Zeekr, Geely also plans to launch electric models equipped with Mobileye SuperVision in 2023 for three other brands.
According to the data, Mobileye is an Israeli automatic assisted driving company, as early as a decade ago was a supplier of BMW 5 Series and 6 Series adaptive cruise technology, and later for Tesla's automatic driving technology support, and was acquired by Intel in March 2017.
A few days earlier, on September 21, another semiconductor chip giant Nvidia unveiled a new generation of "DRIVE Thor" computing platform, which will be dedicated to autonomous driving and assisted driving, as well as a series of digital functions including in-car entertainment. At the same time, it was announced that the first batch of DRIVE Thor customers were the Zeekr brand under the Chinese car company Geely.
Photo / NVIDIA DRIVE Thor computing platform conference
If you cooperate with a single chip giant, it is a very normal cooperation for Geely. However, putting these two collaborations together, Geely brings together the two top suppliers of automotive chips and autonomous driving technology in the industry, with the Zeekr brand as the connection point, and then enhances the overall intelligent development of Geely Automobile.
From the current layout of Geely, with the endorsement of Aston Martin and Renault, the "back garden" of Geely fuel vehicles is safer. With the assistance of Intel and NVIDIA, two major automotive intelligent chips, Geely can accelerate the intelligent transformation of products.
Going hand in hand on both the brand and technology routes is both embracing the future and taking into account the past. From an objective point of view, these few moves played by Geely are far better than the launch of one or two new cars.
2. Lost crowns
As the saying goes, the ideal is full, and the reality is skinny. The reason why Geely tells the story of car building is undoubtedly anxious to show the outside world that it is "a big family": there is Volvo in front, Daimler in the back, Lotus and Aston Martin, and Renault in the future...
However, it is still too early for Li Shufu to say that these moves are "one move to win or lose", and it can barely be regarded as "reversing" the backward situation of Geely, and whether he can achieve the final victory depends on how to fall behind.
Geely, which does not have a strong sense of existence, can no longer sing a high profile in products when fuel vehicles switch to the new energy track, and even the vigorous extreme krypton brand has not tasted like walking on thin ice in the development process, staggering in the controversy.
According to the data of the passenger car association, the sales of narrow passenger cars in China reached 1.922 million units in September, a year-on-year increase of 21.5%; Cumulative sales in the first three quarters were 14.875 million units, a y/y increase of 2.4%. On October 10, Geely Automobile released its latest monthly sales data: Geely achieved sales of 130,500 units in September, a year-on-year increase of 26%; Sales from January to September totaled 989,600 units, up 7% y/y.
Judging from the September data alone, Geely Automobile's monthly sales and growth rate are not bad, but from the perspective of the overall sales in the first three quarters, there is not much change from the same period of the previous year.
If Geely Auto is placed in the entire domestic auto market, whether it is monthly sales growth or cumulative sales growth, there is no doubt that Geely outperforms the market. In particular, the new energy market has seen several times of ultra-high-speed growth.
According to Geely Automobile's monthly sales announcement, Geely's sales of generalized new energy models (including pure electric, plug-in hybrid and gasoline-electric hybrid) in September were 43,000 units, a year-on-year increase of 394%, accounting for 32.95% of total sales. The cumulative sales of new energy models in the first three quarters were 240,400 units, a year-on-year increase of 433%, accounting for 24.30% of the total sales.
For a large car company that sells millions of vehicles a year, it is obviously not very reasonable to suddenly quadruple the growth rate. While applauding, we should also soberly realize that Geely New Energy Vehicles had a low base last year, so that there would be high growth. It shows that its new energy started late.
Of course, this is not a problem for Geely as a car company, traditional large car manufacturers at home and abroad are facing the problem of starting late and not catching up with new energy.
It is more noteworthy that when the growth of new energy models exceeds four times, the overall sales have not increased significantly, which means that the sales of fuel vehicles have declined. "Bullet Financial View" sorted out Geely's September announcement data and found that Geely's fuel vehicle sales in September fell by 8% year-on-year, and the cumulative sales in the first three quarters fell by 15% year-on-year. The acquisition of the Volvo brand in exchange for the Lynk & Co brand, in the first three quarters of the cumulative sales fell by 17% year-on-year.
In the view of "Bullet Financial View", Geely and Salis face the same problem: the overall sales are weak, and the proportion of new energy is increasing, which means that new energy has eroded fuel vehicles. New brands and new models bring a part of the new market share to a certain extent, but the old brands and old models are also losing part of the market.
In this way, it seems that it is a bit of "tearing down the east wall to make up the west wall", and Geely not only did not keep up with the sales and market share of the car, but also caught up with the product research and development and brand promotion expenses of new brands and new models.
Looking at the past 20 years, Geely Automobile's annual sales volume of 1,500,800 units in 2018 hit a record high of 1,500,800 units after 19 years of high growth from the time of mass production of its first model in 2000. This was followed by a clear downward trend and stagnated at the annual sales level of 1.3 million units for three consecutive years.
Also in 2018, Geely Holding announced that the total sales of Geely Holding brands reached 2.15 million units in 2018, and in just four years from 2015 to 2018, Geely Holding's total vehicle sales achieved a leapfrog breakthrough from 1 million to 2 million.
In this way, Geely's "weakness" has not appeared in the past one or two years, but in the past three years or so when fuel vehicles switched to new energy tracks.
This time the "code" Aston Martin is no longer as fast as buying Volvo and investing in Daimler. Li Shufu's desire to rewrite the myth of mergers and acquisitions is obviously unrealistic, let alone gamble on the unknowable future with the current Geely.
3, Li Shufu "gambled" several times
"If you fail, give me a chance to fail." In 1999, the big leader in charge of industry went to Taizhou to investigate, and Li Shufu asked the state to give private enterprises a dream of building cars, leaving this sentence.
For more than 20 years, Geely Auto has attacked the city all the way and fought more and more courageously in "big gambles" again and again. Li Shufu, who has had a "gambling" nature since he was a child, has not yet seized this opportunity to fail.
In the early 80s of the 20th century, Li Shufu, who had just graduated from high school, opened a photo studio with a camera of 120 yuan. After earning his first pot of gold in the photo studio, he founded a refrigerator factory called "Arctic Flower". In just a few years, Li Shufu has transformed from a literary and artistic young man holding a 100-yuan camera to the director of a large enterprise with annual sales of 10 million yuan.
Just when the refrigerator factory was in full swing, due to the change in macro policy, Li Shufu decisively made "concessions", handed over the factory, workshop, inventory, and the deposits on the account to the "collective", and went south to Shenzhen University with nearly 10 million funds for "further study".
In an era when "10,000 yuan households" can be praised to the sky, the young Li Shufu's crossover from a photo studio to a refrigerator factory is also doomed to be restless from 100 yuan to 10 million yuan. Later, Li Shufu once said to the outside that this was the "big gambling" gene he had since he was a child.
After the "advanced study" of Shenzhen University, Li Shufu's vision was broadened and he saw the market for transportation tools. In 1993, Li Shufu was very interested in motorcycles, and Li Shufu, who said that he could do it, set up a motorcycle factory while the iron was hot. If you don't understand technology, you start by dismantling and imitating; Without production qualifications, he acquired a state-owned motorcycle factory that was about to close.
When Geely's motorcycles entered the streets, Li Shufu smelled the market opportunity for four-wheeled vehicles.
Photo / Geely Holding official website
In 1998, Geely's first car officially rolled off the production line, and like the environment in which Chery Auto was located, Geely Auto also encountered the dilemma of being unable to mass produce due to the state's restrictions on private economy entering the automotive industry. It was not until 2001 that Geely finally obtained the country's first "birth permit" for a private automobile factory. A year later, Geely was among the top ten Chinese auto companies.
"Supporting the bold, starving the timid", Li Shufu used these three entrepreneurial experiences that seemed extremely bold at the time to plant the seeds for the "big gamble" of the later acquisition of Volvo.
On the eve of the 2006 economic crisis, global asset prices soared, the bubble was so severe that Ford, an American car factory that fell into huge losses, had the idea of selling Volvo. But unable to find a suitable buyer, Volvo, which was valued at $4 billion at the time, was discounted to $2 billion in 2008.
After some competition, Geely acquired a 100% stake in Volvo in 2010 for a "down payment" of US$1.8 billion (about 12 billion yuan). Together with the subsequent US$900 million in working capital, the final price of the acquisition is US$2.7 billion (approximately RMB18 billion).
But Geely, which just bought the world's second-largest automatic transmission company (DSI) a year ago, where does it have the money to pay the $1.8 billion "down payment"? Even with the $1.8 billion, Volvo, before the acquisition, lost nearly $1 billion in 2009, with an uncertain outlook. If you are not careful, Geely may "empty the bamboo basket".
According to CCTV, for the acquisition, Bank of China prepared a five-year loan of $1 billion for Geely, and the Export-Import Bank of China and local governments supported an undisclosed amount of loan funds, plus loans Geely received from European and American financial institutions. In this way, Geely's acquisition seems to be the biggest financial problem, which is no longer a problem.
It has been reported that in order to accelerate the closing of the merger, Geely also received a $200 million loan from Ford. It can be seen how impatient Ford is to sell Volvo. Geely, on the other hand, took other people's money and bought other people's assets. This "big bet" also made Geely fight in the overseas merger and acquisition case of Chinese private enterprises.
Judging from today's results, this is a win-win deal: Ford got rid of the "baggage", and Geely picked up the "cheap". But in the environment at that time, it was not so optimistic, except for the good Chinese automobile consumer market, there was hardly any need for such a "big bet". Although Geely raised money is not a problem, this money is not blown by the wind, the loan has to be repaid, and the interest must be paid.
In addition, in the face of Volvo, which has a total price of 18 billion, Geely's revenue in 2010 is only 20 billion. The Volvo bought back, not to mention how much revenue it will create for Geely, and when it will turn a profit is a problem. After all, Volvo, which has been held by Ford for ten years, not only failed to come back to life, but was also sold at a discount.
This acquisition case, which is not favored by outsiders, is a "bet" for Li Shufu to take the entire Geely as a "bet". Since then, Li Shufu has also been labeled as a "car maniac" and a "car building maniac".
Photo / Geely Holding Group official website
4. Conclusion
Without technology, to learn, to imitate, to learn to imitate is not to spend money to buy.
Without a brand, to incubate, to build, incubation to create does not achieve to spend money to buy.
The automotive industry is a highly integrated industry, and there is almost no automobile manufacturer in the world that can control raw material procurement, product design, vehicle production, and channel distribution from upstream to downstream... It is not a shame to rely on the cooperative division of labor in the supply chain to survive in this industry.
Of course, can have the independent control of core technology has a great competitive advantage, if there is no accumulation of core technology, in this industry there are some stable and reliable supply chain relationships, can also be in the automotive industry to expand territory, such as Tesla, Volkswagen, Toyota and other world-class car manufacturers, isn't it also dependent on the external supply chain?
Geely's control of the supply chain, in addition to consolidating the cooperative relationship between all parties through commercial contracts and order prices like other car companies, prefers to choose to establish equity cooperation ties with established enterprises in the industry to form a community of interests.
In this way, whether it is the research and development of new technologies or the use of new technologies, there is a certain degree of autonomy or priority. The acquisition of Volvo bought not only the trademark of a luxury brand, but also the accumulation of technology of Volvo Cars; Daimler is not only interested in the crown of Mercedes, but also wants to establish a strong cooperative relationship; The same is true of the acquisitions of Proton Motors, Lotus, Aston Martin and, at the moment, Renault's fuel engine business.
The influence of its own brand is not large, the accumulation of technology is not enough, and the experience of car building is insufficient, so it is tied to world-class brands through equity, and "if you can't learn, you will buy" - this is Li Shufu taking Geely on a car building road different from BYD and SAIC. In the future, in the competition field of new energy vehicles, will the "God of Gambling" still stand on Li Shufu's side?
*The title picture in this article is from: Visual China, based on RF protocol.