On the eve of the Guangzhou Auto Show, a big news of integration swept the entire automotive industry.
As a key measure to implement the strategic framework of the Taizhou Declaration, on November 14th, Geely Holding announced the optimization of the equity structure of Jike and Lingke. Jike will hold 51% of Lynk&Co's shares, while the remaining 49% of Lynk&Co's shares will continue to be held by a wholly-owned subsidiary of Geely Automobile.
Among them, some of the Lynk&Co shares held by Jike are from Volvo Cars. On the same day, Volvo announced the sale of its 30% stake in Lynk&Co to Jike for a consideration of 5.4 billion yuan. The transaction consideration will be paid in cash, with 70% paid upon completion of the transaction, and the remaining 30% and interest paid one year after completion of the transaction. The transaction is expected to be completed in the first quarter of 2025.
In addition, 20% of the remaining Lynk&Co shares acquired by Extreme Krypton are from Geely Holding, with a consideration of 3.6 billion yuan. In addition, Extreme Krypton subscribed to Lynk&Co's newly added 1% registered capital at a cost of nearly 370 million yuan.
The news of this transaction with a total price of nearly 10 billion yuan immediately sparked heated discussions within the industry. Geely has high expectations for this merger and claims that Jike and Lynk&Co will strengthen collaboration in technology, products, supply chain, manufacturing, marketing and services, international market expansion, and other aspects to stimulate economies of scale. By the end of 2026, the annual production and sales target of "New Jike" is one million vehicles.
But in the capital market, investors do not quite recognize the value of the merger of Lynk&Co and Jike. On November 14th, Eastern Time, the stock price of Jike US stock continued to decline, and as of press time, it fell more than 26% during the trading session.
There are still doubts in the market about why Geely chose to merge these two seemingly thriving brands at this point in time, and what direction the two major brands, Jike and Lynk&Co, should take after the merger.
At the third quarter performance exchange meeting of Geely Automobile held on the evening of November 14th, Gui Shengyue, CEO and Executive Director of Geely Automobile Holdings Limited, explained that although the two brands have different positioning, their prices overlap. If they are not integrated, it will inevitably bring about competition problems in the industry. At the same time, there have been internal conflicts between Jike and Lynk&Co in the operation of their new products competing with each other in the market. On the other hand, there may be duplicate investments between two brands in many areas that could have been shared, such as research and development, architecture, sales, etc.
In the current fiercely competitive Chinese automotive market, we need to share resources more efficiently, use scale to drive cost reduction, and improve competitiveness. This is very important for every company, "said Gui Shengyue. The integration of Lynk&Co and Jike can eliminate industry competition; Secondly, brand positioning can complement each other; Thirdly, complementary research and development capabilities can be achieved; Fourth, complementary sales networks; The fifth is to increase economies of scale.
In fact, this billion yuan transaction between Lynk&Co and Jike is not the first integration of Geely in recent times.
Since the release of the "Taizhou Declaration" by Li Shufu, Chairman of Geely Holding Group, in September this year, Geely's entire strategy has begun to lean towards contraction. Among them, in the "Strategic Integration" section of the "Taizhou Declaration", Li Shufu pointed out that "Geely will make a new decision on the retention of the brand".
Shortly thereafter, on October 9th, Gan Jiayue, CEO of Geely Jiqi Automobile, announced that Geometry had officially merged into the Geely Galaxy brand; On October 21st, Geely Automobile announced the acquisition of Ningbo Passenger Car. Recently, there have been reports in the market that Geely's radar brand, which focuses on new energy pickup trucks, and LEVC (Yizhen Automobile), which focuses on the large space MPV market, will be merged into Geely.
As for the development plan of the two major brands after the merger of Lynk&Co and Jike, on November 14th, Jike CEO An Conghui responded at Jike's third quarter performance report meeting. An Conghui stated that the merger of Jike and Lynk&Co is not simply a combination, but a deep restructuring of their respective businesses. In terms of brand planning, "New Jike" will maintain the independent operation strategy of Jike and Lynk&Co, with different market positioning. Jike covers the mainstream luxury market, while Lynk&Co covers the mid to high end market.
In terms of product planning, the Jike brand will focus on mid to large luxury car models, while the Lynk&Co brand will position itself as a mid to small high-end car model. In terms of energy forms, Lynk&Co focuses on small car pure electric and mid size car hybrid, while Jike focuses on mid size car pure electric and large car hybrid.
After the merger, Lynk&Co will continue to use Geely's EMP system, while Jike is developing a new set of electric hybrid technology suitable for large vehicles. This system will be used in large SUV and MPV models, and the specific models will be unveiled at the Shanghai Auto Show in April next year and officially launched in the second half of next year.
In terms of sales model, Jike will continue to adopt the "direct sales+" model, while Lynk&Co will adopt the dealer model. The two brands will maintain independent sales channels in first - and second tier cities, but in third -, fourth -, and fifth tier cities, Lynk&Co and Jike can share channels.