Ahead of the Shanghai Auto Show, Daimler is reportedly coming close to a deal to sell a stake in its small car division Smart to Geely Auto. An unnamed source claimed that the deal would be confirmed prior to the event in April, The Financial Times reported.
Smart’s future with Daimler had been uncertain after the announcement that Dieter Zetsche would leave his chief executive position. Zetsche was enthusiastic about the brand, but Ola Kallenius, his successor, is believed to share less excitement for the arm. And, as it stands, Evercore ISI estimates that Smart has losses ranging from €500m to €700m yearly.
At the same time, the brand makes up only a small portion of the more than 2 million cars sold by Mercedes-Benz at 130,000 cars per year. A representative from Geely reportedly declined to comment per FT, but the firm has reportedly grown quickly in recent years. The firm owns Proton, Lotus and Volvo Cars, while it also has a stake in Volvo Group.
Daimler and Geely have worked together more closely over the prior year: Daimler Mobility Services and Geely Group Company announced the creation of a joint venture for high-end ride-hailing in China in October. The firms said that the service would offer services for ride-hailing in multiple cities in China through premium vehicles. And Mercedes-Benz S-Class, V-Class and E-Class, along with Maybach vehicles, would make up the first fleet. They also could be supplemented by Geely Group electric vehicles.
Daimler Financial Services AG CEO Klaus Entenmann said in a press release at the time, “Daimler is ideally positioned to continue its transformation by expanding into a comprehensive mobility services company as we pave the way to autonomous driving. With Geely Group, we have found an excellent partner to expand our mobility services in China.”
It was also reported at the time that Geely Group Company and Daimler Mobility Services would be equally represented on the board of the new ride-hailing service. In addition, both firms were said to work to create the software infrastructure to support the business in China.