Holding pattern suggests that Geely could try to leverage its new acquisitions first

It seems that the only company that can stop Geely from conquering the auto industry is Geely itself. The Chinese car giant recently scored another blockbuster acquisition when it finalized a deal to buy 9.69 percent of Daimler, making it the largest outside shareholder of the German auto conglomerate, edging out the Kuwait Investment Authority and the Renault-Nissan-Mitsubishi Alliance, which had 6.8 and 3.1 percent, respectively. Now, it looks like Geely’s ready to slow its roll on making more acquisitions, at least for the time being.

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The deal with Daimler is important for a number of reasons, one of which is that Geely gets a huge share of a company whose business is trending up as we speak.

While there’s no clear-cut explanation about why Geely’s holding off on buying more stock from Daimler, the reason for doing so could be tied into what the automaker plans to do with the shares it just acquired. The deal with Daimler is important for a number of reasons, one of which is that Geely gets a huge share of a company whose business is trending up as we speak. Daimler is doing so well these days that it has managed to unseat BMW AG in the top spot among luxury car brands in the world. Geely now gets a big share of that business, so it’s reasonable to think that it’s going to try to ride that wave of momentum for the time being.

Another reason could be the newfound opportunity that comes with leveraging Daimler’s vast technological resources and using it for its own purpose. The engineering and technological knowledge Daimler possesses, especially when it comes to electrification and autonomous driving tech, is a big draw for Geely as it tries to establish Lynk & Co., its own startup electric car company.

Geely’s acquisition also points to a bigger trend that’s happening in the industry. An analyst of the industry spoke about it in a conversation with Autocar. "With all the disruption in the market and luxury brands across the world working on their future investments in areas like EVs, autonomous vehicles and mobility-as-a-service, the established brands will be regularly courted by new entrants to establish brand loyalty in new products (such as EVs) and ensure cost-effective use of new technologies,” the analyst.

With the spending spree over, now’s as good a time as any for Geely to sit back, look at the things it has just purchased, and see where they fit into the company’s own plans for the future.

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Source: Reuters

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