Geely Auto , which is keen on "buy, buy, buy", has successfully won another game.
htmlOn September 30, Geely Holdings announced that it had completed the acquisition of 27.60% of the shares of the British super luxury performance brand Aston Martin html, which also means that Geely Auto's investment territory has expanded again.
In fact, the investment in Aston Martin is the fourth time that Geely Auto has invested in a foreign auto company in recent years.
Since successfully acquired the equity of Volvo , Geely Auto has successively invested in Proton Auto, the "No. 1 Magic Car in Southeast Asia" and Mercedes-Benz parent company Daimler and Renault Korean Automobile, and has become the "king of mergers and acquisitions" in the car circle.
However, in terms of sales, the "pharmaceutical effect" of Geely Auto's global merger and acquisition strategy is continuing to weaken. According to the latest data, Geely Auto sold a total of 122,635 new cars in August this year. Although it increased by 39% year-on-year, it is already quite different from the 174,915 vehicles of the first place , BYD and the 131,515 vehicles of the second place Chery Auto.
is different from BYD and Chery Auto to do research. The global merger and acquisition strategy implemented by Geely Auto is more inclined to acquire more advanced technology by investing in other car companies, but this seemingly easier path is not easy to walk now.
acquires stake in Aston Martin, Geely picked up a "hot potato"
After successfully taking 7.6% of Aston Martin's shares, Geely Auto became the target of hot discussion.
However, judging from the trend of the secondary market, investors did not respond much to this acquisition by Geely Auto.
On October 3, opened , and Geely Auto's stock price opened 2.4% lower and finally closed down 0.55%, which performed quite dull. On October 5, affected by the collective surge in the Hong Kong stock market, Geely Auto's stock price rose by 6.88%, but the reason behind the surge was obviously not because of the acquisition of 7.6% of Aston Martin's shares.
In fact, although Aston Martin is very famous in China and the name of "a century-old luxury brand" is indeed not small, Aston Martin's fundamentals are not good, and it can even be described as "a mess".
According to media statistics, from its establishment in 1913 to the present, Aston Martin has gone bankrupt seven times, and it is difficult to change the current situation of the rivers after several changes. Judging from the financial report, as of the first half of this year, Aston Martin's total liabilities were 2.3 billion pounds, and his pre-tax loss in the first half of the year reached 285 million pounds, and his market value was only 1.459 billion US dollars.
It is obvious that Aston Martin's popularity is not that strong at present. Compared with real luxury brands such as Porsche and Ferrari , Aston Martin brand effect is obviously much worse.
In addition to the poor fundamentals, it is still unknown how much profit Geely Auto will bring to Aston Martin this time.
From the current perspective, Geely ranked fourth largest shareholder after the acquisition of the shares, which cannot determine Aston Martin's daily operations; and from Aston Martin's plan, it will focus on transformation in intelligence and electrification in the future, but transformation means burning money. As for how much it will eventually burn, it is obviously an unknown.
Geely Automobile's investment in Aston Martin this time may be just to have a premium for luxury brands, but as of now, the "price" that Geely Automobile needs to pay for this may be quite large.
Geely has become the "king of mergers and acquisitions"
As the leader of independent brands, Geely Auto has been implementing a global merger and acquisition strategy in the past decade.
The history of Geely Auto’s merger and acquisition can be traced back to 16 years ago in 2006. At that time, Geely Auto acquired 19.97% of the shares of British Manganese Copper Holdings, the main manufacturer of taxis in London, England. After the acquisition, Geely cooperated with Manganese Copper Holdings to establish a joint venture factory and began to produce British TX4 taxis.
Of course, from now on, Geely Auto’s acquisition of British manganese copper is just a test.
Four years later, Geely Auto acquired Volvo sedan business from Ford for US$1.8 billion, and acquired 100% of the equity of Volvo sedan, staged a "snake swallowing elephant" incident that shocked the entire automobile circle.
's acquisition of Volvo brought transformation to Geely Auto. Before acquiring Volvo, Geely Auto's technology was relatively backward, and its brand and reputation were not very good; but after acquiring Volvo, thanks to the technical support provided by Volvo, Geely Auto's technology began to develop rapidly, and its products, brands and reputation were significantly improved.
After tasting the sweetness brought by the acquisition of Volvo, Geely Auto began to vigorously promote global mergers and acquisitions.
In 2014 and 2015, Geely Auto acquired shares of Emerald Automotive, a British electric vehicle research and development company, and Carbon Cycle International. In 2017, it acquired shares of Malaysia DRB-HICOM Group and indirectly owned 49.9% of PROTON and 51% of the luxury sports car brand Lotus .
By 2018, Geely Auto successfully acquired 9.69% of Daimler's equity, becoming its largest shareholder.
Of course, in addition to acquiring equity of foreign car companies, Geely Auto is also ruthless. As early as 2016, Geely Holdings spent 400 million yuan to acquire 100% of Dongfeng Nanchong Company. By 2020, Geely Automobile acquired stakes in Anhui Hualing Xingma and Chongqing Lifan respectively, and in 2021, it also acquired Shandong Tangjun Ouling Automobile Manufacturing Co., Ltd. .
According to media statistics, in the past decade, Geely Auto has had nearly 10 international acquisitions, and 6 domestic acquisitions have also occurred. "Buy, buy, buy, buy" has become one of Geely Auto's most important strategies.
How far can Geely Automobile's M&A go?
It is undeniable that Geely Automobile's M&A strategy has indeed brought it success.
However, judging from the recent situation, the "pharmaceutical effect" of Geely Auto's global merger and acquisition strategy is weakening.
From the perspective of stock price, since it peaked at HK$36.04 per share last year, Geely Auto's stock price has continued to weaken; as of the closing on October 5, Geely Auto's stock price closed at HK$11.5 per share, which has been "knee-cut" compared with the highest point, and its market value has evaporated by 220 billion.
In comparison, BYD's stock price has risen sharply in the past two years. As of the closing on September 30 this year, BYD's stock price closed at 252.01 yuan per share. Although the stock price has fallen sharply recently, the increase has still reached 57.96%.
Of course, in addition to stock price performance, Geely Auto’s sales began to fall behind, which is the most obvious feature of its global merger and acquisition strategy’s weakening of the “pharmaceutical effect”. Judging from the sales volume in August this year, in August this year, Geely Auto sold a total of 122,635 new cars, although it increased by 39% year-on-year, it has clearly lagged behind BYD's 174,915 and Chery 's 131,515.
Look at the cumulative sales volume again. Geely Auto's total sales in the first eight months of this year were 859,110 units, a slight increase of 5% year-on-year. BYD, as its old rival, has exceeded one million in the first eight months. Although it is ahead of Chery Auto's 750,000 units, the gap is constantly widening compared to BYD.
In addition, Geely Auto also lags behind in the transformation of new energy. Unlike BYD, which directly announced the suspension of fuel vehicles, most of Geely Auto's sales are still from fuel vehicles. According to data, Geely Auto delivered a total of 86,000 new energy vehicles in 2021, accounting for only 6.8% of the total delivery volume.
In fact, the above problems arise are actually caused by Geely Auto's overly reliance on mergers and acquisitions.
At present, the global automobile industry has begun to transform towards new energy. New energy, as a new technology, is obviously not possible through simple acquisitions of other car companies. This is also the reason why new energy vehicle companies led by BYD have continued to rise in the past two years, but Geely Auto’s stock price performance has been very sluggish.
It is undeniable that mergers and acquisitions are indeed a "shortcut" for car companies, and Geely Auto has achieved a qualitative leap through mergers and acquisitions.
However, truly good technology cannot be bought, especially when the transformation of new energy has become a major trend. It is necessary to continue to fight hard by car companies themselves to obtain real core technology. In this case, will Geely's global merger and acquisition strategy still work?
