GENEVA: Executives at Daimler and Volvo Cars question the viability and industrial logic of a plan by their major shareholder, China’s Geely, to form an auto industry alliance to counter ”tech invaders.”
Li revealed last month he had built up an almost 10 percent stake in Mercedes-Benz maker Daimler, hoping to access electric and self-driving cars technology as a way to respond to new competitors such as Uber and Google.
But executives at the Geneva auto show from both Daimler and Volvo Cars questioned how a deal could work without compromising their own independence and leadership in key technologies.
Because Zhejiang Geely Holding already owns Volvo Cars, a stake in truckmaker AB Volvo, and 49.9 percent of Malaysian automaker Proton, German executives fear any wide-ranging cooperation could strengthen an industry rival.
“Ideally we want a win-win alliance. Handing Volvo and Geely our Mercedes technology is not win-win,” one Mercedes-Benz executive, who declined to be named, told Reuters.
Geely’s proposal poses a further challenge to the Germans, because Mercedes-Benz, which has expertise in self-driving cars, connected vehicle and electrification technology, already has an alliance with Renault-Nissan.
It also has a deal to build conventional and electric cars in China with existing joint-venture partner BAIC Motor Corporation.
Daimler Chief Executive Dieter Zetsche cautiously welcomed his new shareholder at the Geneva show, expressing admiration for Li and Geely, but said any alliance would depend on keeping BAIC happy.
“We will examine everything if it is in keeping with the wishes of our partner,” Zetsche told reporters.
Geely’s ownership of a stake in Volvo trucks, a direct competitor to Daimler’s trucks business, makes cooperation particularly difficult in the area of commercial vehicles, Volvo Cars Chief Executive Hakan Samuelsson told Reuters.
“In the truck business, Daimler and Volvo are really heads on competitors, maybe in a more sharper way than we are with Daimler,” Samuelsson said. ”It is difficult to invest in two competitors.” While Li’s aim is to forge an alliance primarily between carmakers, cooperation there is also tricky, he added.
Strong companies with a technological edge are unwilling to share areas of expertise where they have a competitive advantage, or where they believe it will be a key differentiating factor in future, Samuelsson said.
For Volvo, this would be in the area of autonomous driving.
“If you believe you can do it better yourself, you have no interest to share it with somebody else,” Samuelsson said.
In more generic areas such as brakes, shock absorbers and gear boxes, there is broader scope for cooperation, but these technologies can already be bought from suppliers, making it hard to have a meaningful alliance, he added.
Before investing in Daimler, Geely also held talks with Fiat Chrysler Automobiles , the head of the Italian-American carmaker said this week.
“We have a number of institutional meetings in the industry; we consider them to be a matter of normal practice,” Sergio Marchionne told reporters in Geneva, adding it had been a “pleasant exchange.” Marchionne declined to go into detail about the talks, but concluded Fiat Chrysler did not need ”a Chinese investor.”
Keyword: Daimler, Volvo Cars executives sceptical over Geely alliance plan