New Mercedes-Geely JV is good for both, says GlobalData

Following the announcement that Mercedes-Benz and Zhejiang Geely Holding Group have formally established the global joint venture (JV) ‘smart Automobile Co., Ltd’ for the Smart brand after receiving the necessary regulatory approvals;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“This deal makes a lot of sense for both carmakers, yielding benefits as electrification gathers pace in the global auto industry. China’s circa 25 million unit annual light vehicle (LV) market is shaping up to be at the epicentre of this transformation over the next decade.

“For Mercedes-Benz, it reinvents the Smart brand – a brand that has had limited success as an urban small car niche player – as an all-electric specialist. Moreover, it shifts the manufacturing base for the brand to China from 2022. That in itself would be a good move given the importance of the Chinese market for future sales of electric vehicles (EV), but it has also selected a well-established local partner for the venture, something that will be essential in securing a good manufacturing base and supply chain.

“Back in Europe, it also has the opportunity to repurpose the current Smart Hambach plant and dedicate it to the emerging Mercedes EQ electric sub-brand – which is about larger and more premium electrified vehicles than Smart.

“Geely gets the benefits of working closely with a German premium maker in the venture – both in joint design and development of future electric Smart models themselves and in the delivery of new mobility services to future customers via the Smart brand. This latest venture deepens the cooperation between the two – there is also a JV agreement to provide ride-hail mobility services in Chinese cities.”

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