Summary
- Zeekr will gain a controlling 51% stake in Lynk & Co, valued at $2.5 billion, to improve coordination and eliminate overlap
- Geely wants to streamline its business by putting Lynk & Co under Zeekr’s control, aiming to increase combined sales to over 1 million units annually
- Geely is positioning Zeekr as the group’s innovation leader to share technology with its 12 brands
- Zeekr vehicles will become available through Lynk & Co dealer network to expand availability
- The move to reorganize brands was prompted by Chinese automakers’ competitive pricing strategies, with Zeekr’s market value reaching $7.3 billion
Article
Geely Streamlines Business Operations through Acquisition of Lynk & Co by Zeekr
Geely, the Chinese automotive giant, aims to maximize its competitiveness in the market by streamlining its business operations. In an effort to achieve this goal, Geely has decided to put Lynk & Co under the control of Zeekr, a move that will see Zeekr gain a controlling 51% stake in Lynk & Co. This strategic decision is aimed at improving coordination between the two brands, eliminating overlap in their models, and cutting costs. With this acquisition, Zeekr will have access to Lynk & Co’s dealer network, expanding its reach in cities where it was not previously present.
Zeekr Positioned as Geely’s Innovation Leader
Geely is positioning Zeekr as its research, development, and innovation leader, with the intent to share its technology with the group’s 12 brands, which include Volvo, Polestar, Smart, and Lotus. By making Zeekr the innovation leader, Geely hopes to increase the combined sales of the group to over 1 million units annually, a significant increase from the 340,000 sales achieved last year. The company believes that operating Zeekr and Lynk & Co under the same management will streamline operations and lead to a more efficient use of resources in an increasingly competitive market.
Expansion into International Markets
Both Lynk & Co and Zeekr are already selling vehicles outside of China, with a strong presence in European markets. Lynk & Co’s 01 plug-in SUVs are readily available for rentals in large European cities, with a growing number of privately owned vehicles as well. Zeekr, on the other hand, has delivered its first car to a Dutch customer and currently offers two models, the 001 fastback and the X compact SUV. With Geely’s reorganization of its brands, including the acquisition of Lynk & Co by Zeekr, the company aims to strengthen its foothold in international markets and increase its global presence.
Performance and Market Position
In recent years, Geely has faced stiff competition in the global automotive market, particularly from rapidly-growing companies like BYD. Despite being overshadowed by its competitors, Geely is poised to exceed 2 million sales in 2024, a significant increase from previous years. The company’s shares have also seen a 40% increase following its listing on the NY stock exchange, reaching a market value of $7.3 billion. The decision to reorganize its brands, including integrating Lynk & Co under Zeekr’s control, is a strategic move by Geely to enhance its market position and remain competitive in the automotive industry.
Impact on Research and Development
Geely CEO Gui Shengyue highlighted the importance of integrating Zeekr and Lynk & Co to avoid internal competition, redundant investments, and increase efficiency. The company expects that by combining the two brands, it can reduce research spending by up to 20%. This shift in strategy reflects Geely’s commitment to optimizing its resources and maximizing its competitiveness in the global automotive market. By consolidating its brands under the leadership of Zeekr, Geely aims to drive innovation, streamline operations, and capitalize on its technological advancements to propel growth and success in the automotive industry.
Future Outlook and Competitive Landscape
With the acquisition of Lynk & Co by Zeekr and the reorganization of its brands, Geely is poised to make significant strides in the international automotive market. The company’s expansion into European markets, focus on innovation, and efforts to increase efficiency and coordination between its brands position it for future success. As Geely continues to evolve and adapt to the changing landscape of the automotive industry, its strategic decisions, such as the acquisition of Lynk & Co by Zeekr, will play a crucial role in shaping its future growth and competitiveness on a global scale.
Read the full article here
