The strategic integration of Jike and Lynk&Co under Geely Holding has made new progress. On December 3rd, Lin Jinwen, Vice President of Extreme Krypton Intelligent Technology, posted on Weibo that after the strategic integration of Extreme Krypton and Lynk&Co, the main body of "Zhejiang Extreme Krypton Intelligent Technology Co., Ltd." has not changed. The new company after integration is referred to as "Extreme Krypton Technology Group", which has dual brands of Extreme Krypton Automobile and Lynk&Co Automobile. It strives to create a high-end luxury new energy vehicle group with annual sales of millions of yuan through two years of hard work.
According to a reporter from China Business News, on November 14th, Geely Holding announced the optimization of the equity structure of Jike and Lynk&Co, streamlining equity relationships, reducing related party transactions, eliminating inter industry competition, and steadfastly promoting deep and efficient integration of internal resources. 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 (0175. HK).
According to the information disclosed by the enterprise, after the integration of the two brand strategies, the front-end will maintain independent operation of the two brands, and the back-end will be fully integrated. An Conghui, President of Geely Holding Group and CEO of Jike Technology Group, predicts that through maximizing collaboration, R&D investment will be reduced by 10% -20%, BOM costs will be reduced by 5% -8%, production capacity utilization rate will be increased by 3% -5%, and marketing and service management expenses will be reduced by 10% -20%.
According to relevant data, in November of this year, Lynk&Co delivered 32679 vehicles, while Extreme Kr delivered 27011 vehicles, totaling nearly 60000 vehicles. From January to November, Extreme Kr and Lynk&Co delivered over 450000 vehicles, with new energy accounting for over 75%. In 2024, the delivery volume is expected to exceed 500000 vehicles.
Sword Finger Production and Sales Million level New Energy Vehicle Group
In September of this year, Geely Holding Group released the "Taizhou Declaration" at the Taizhou International Automotive Industry Expo, announcing that the company has entered a new stage of strategic transformation. The group will focus on the automotive industry, layout the technology ecosystem, enhance competitiveness, strive for progress while maintaining stability, and promote sustainable development of the enterprise through five major measures: strategic focus, strategic integration, strategic synergy, strategic stability, and strategic talent.
The significance of the Taizhou Declaration and the Ningbo Declaration is equally important. We seized the opportunity of the automotive industry's transformation, conducted strategic review and scan, and ultimately formed a strategic consensus. Firstly, we need to focus on strategy. Previously, Geely was on the path of strategic expansion, but now we need to enter strategic focus. Secondly, we need to integrate strategy, and some (businesses) need to be shut down and merged. Thirdly, we need strategic synergy. Fourthly, we need strategic stability, and the enterprise needs to strive for progress while maintaining stability. Fifthly, we need strategic talent. We need to ensure the achievement of strategic focus, promote strategic stability, and through strategic integration and synergy, make appropriate arrangements for the entire Geely enterprise to face current environmental changes. "Regarding the considerations and content behind the release of the Taizhou Declaration, Li Shu, Chairman of Geely Holding Group, said. Fu Zeng interpreted it as follows.
Taking "strategic integration" as an example, the Taizhou Declaration proposes to comprehensively sort out Geely's various business sectors, clarify business positioning, formulate medium and long-term development goals, adjust and optimize industrial layout structure, firmly promote deep integration and efficient integration of internal resources, further clarify the positioning of various brands, streamline equity relationships, reduce conflicts of interest and duplicate investments, and improve resource utilization efficiency.
The optimization of the equity structure of Jike and Lynk&Co by Geely Holding is a key measure to implement the strategic framework of the Taizhou Declaration. Geely Holding will transfer its 11.3% stake in Jike to Geely Automobile. After the transaction is completed, Geely Automobile's shareholding in Jike will increase to approximately 62.8%. At the same time, the equity structure of Lynk&Co has been optimized to promote comprehensive strategic synergy between Jike and Lynk&Co. 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.
As is well known, Lynk&Co is a joint venture established by Geely and Volvo, with Geely Automobile, Volvo Cars, and Geely Holding holding 50%, 30%, and 20% of the shares respectively. According to the announcement released by Geely Automobile, Jike will purchase its 20% stake in Lynk&Co from Geely Holding for a price of 3.6 billion yuan, and acquire Volvo's 30% stake in Lynk&Co for a price of 5.4 billion yuan. In addition, on the basis of the above transaction, Jike will also subscribe to Lingke's newly added registered capital at a price of 367 million yuan.
As a key measure to implement the strategic framework of the Taizhou Declaration, this strategic integration will streamline equity relationships, reduce related party transactions, and eliminate industry competition. The complementary platform positioning and R&D capabilities of the two brands will help improve product portfolio and unify product architecture. The deep and efficient integration of internal resources will also further reduce costs and increase efficiency, promote the release of economies of scale, and ultimately achieve an increase in shareholder returns. "Recently, at the 2024 Q3 performance exchange meeting held by Geely Automobile, Gui Shengyue, CEO of Geely Automobile Holdings Co., Ltd., made the above interpretation of the significance of the strategic integration of Jike and Lynk&Co.
Gui Shengyue stated that Geely Automobile has always taken it as its responsibility to create maximum value for shareholders and adheres to the principle of putting shareholder interests first. This strategic integration is not only imperative based on market strategy considerations, but also the best opportunity for small shareholders of Geely Automobile.
In addition, Gui Shengyue also stated that Geely Holding Group has always fully supported the development of Geely Automobile. With a responsible attitude towards all shareholders, injecting high-quality core assets into the listed company this time is an important measure for Geely Holding Group to implement the strategic framework of the Taizhou Declaration, focus on the main business of automobiles, and expand and strengthen Geely Automobile. It is committed to creating greater value for users and investors.
Jike is positioned as a global luxury technology brand, covering the high-end luxury market with a brand tone of "luxury, ultimate, and technology"; Lynk&Co is positioned as a global new energy mid to high end brand, covering the mid to high end market with a brand tone of "trendy, sporty, and personalized".
Geely stated that after the strategic integration of Jike and Lynk&Co, Jike and Lynk&Co will strengthen collaboration in technology, products, supply chain, manufacturing, marketing and services, and international market expansion, enhance technological innovation capabilities, stimulate economies of scale, and strive to build Jike and Lynk&Co into a global leading high-end luxury new energy vehicle group with annual production and sales of millions by the end of 2026.
At the 2024 Q3 performance exchange meeting, Li Donghui, CEO of Geely Holding Group, stated that Geely Holding fully supports the needs of Geely Automobile and will further consolidate its position as the core foundation of Geely Holding's automotive industry. Through this strategic adjustment, Geely Holding's internal equity and management structure has become clearer. In the future, as the major shareholder of Geely Automobile and Volvo, Geely Holding will continue to firmly implement the Taizhou Declaration, further strengthen internal collaboration, and promote deep and efficient integration of internal resources
Scale effect continues to emerge
Under the strategic focus guidance of the Taizhou Declaration, Geely Automobile closely follows the trend of electrification and intelligence, and continues to promote the accelerated outbreak of new energy. In the third quarter of 2024, Geely Automobile's sales reached a historic high of 534000 vehicles, a year-on-year increase of 19%, leading the industry in sales growth rate; The total sales volume from January to September reached 1.4897 million vehicles, a year-on-year increase of 32%, and 74.5% of the annual sales target has been achieved.
It is reported that Geely's new energy products (including Geely, Lynk&Co, and Jike) sold 226000 units in the third quarter, and the penetration rate of new energy in the domestic market exceeded 50% in the third quarter; From January to September, Geely's total sales of new energy reached 546000 vehicles, a year-on-year increase of over 93%.
The reporter learned that as the globalization strategy of various sub brands steadily advances, Geely Automobile's overseas territory is also constantly expanding. In the third quarter, Geely Automobile's overseas export sales reached 117000 vehicles, a year-on-year increase of 71%. From January to September, Geely Automobile's cumulative overseas export sales reached 314000 vehicles, a year-on-year increase of 68%, far exceeding the year-on-year growth rate of automobile exports announced by the China Association of Automobile Manufacturers during the same period.
Entering the third quarter, Geely's transformation towards new energy is accelerating comprehensively, focusing on building the Geely Galaxy in the mainstream new energy market. In the second half of the year, Geely Galaxy E5 and Geely Star Wish will form a "pure electric twin star". Among them, the Galaxy E5 delivered over 50000 vehicles within 100 days of its launch, while Xingyuan delivered over 20000 vehicles within 33 days of its launch. The total sales of Geely Galaxy (excluding Geometry) from January to September reached 153682 units, helping the Geely brand achieve a total sales of 1151214 units from January to September, a year-on-year increase of 27%. The Geely Galaxy Starship 7 EM-i is the first to be equipped with the Thor EM-i super hybrid, leading the electric SUV into the era of 3L fuel consumption. Currently, pre-sales have begun and the first batch of production vehicles have been produced.
In terms of the Lynk&Co brand, with the help of the Lynk&Co 07 EM-P and Lynk&Co 08 EM-P "Super Electric Twin Stars", Lynk&Co's total sales from January to September this year reached 195603 vehicles, of which new energy products accounted for over 67% in September. The Jike brand has launched new models such as the Jike 7X and Jike MIX, with Jike 001 and Jike 009 ranking first in the segmented market sales. This has driven the brand's delivery volume to 142873 vehicles in the first nine months of this year, and also resulted in Jike's cumulative delivery volume of nearly 340000 vehicles as of the end of September.
Geely Automobile is also constantly expanding its overseas market layout. Geely continues to deepen its strategic layout in the Middle East, Asia Pacific, Africa, Latin America, Europe and other regions, accelerating the full system output of products, channels and technologies. Geely Preface debuted in the United Arab Emirates, Atlas was launched in Kazakhstan, and New Emgrand was released in Mexico. The Lynk&Co brand continues to deepen its presence in the European and Asia Pacific markets, launching the pure electric Lynk&Co Z20, making its global debut, and launching it in the Latin American and Middle Eastern markets. The Extreme Krypton brand is accelerating its globalization, landing in Thailand and launching the right-hand drive version of the Extreme Krypton X, entering markets such as Norway and Egypt. Extreme Krypton has expanded to more than 40 countries and regions around the world.
At the third quarter performance meeting, Gan Jiayue, CEO of Geely Automobile Group and Executive Director of Geely Automobile Holdings Limited, pointed out that the company is accelerating the deepening of its global strategic layout, accelerating new market development and global product launch, and is expected to export over 400000 vehicles for the whole year this year. Lynk&Co will strengthen its European strategy and further explore the European market through in-depth cooperation with Volvo. It is expected that by the end of the year, Lynk&Co will sell in 30-50 stores and expand to 100-120 stores next year.
According to the financial report for the third quarter of 2024, Geely Automobile achieved a revenue of 60.4 billion yuan, a year-on-year increase of 20.5%, and the highest single quarter revenue in history; From January to September, Geely Automobile achieved a revenue of 167.7 billion yuan, a year-on-year increase of 36%. Benefiting from economies of scale and optimized product structure, Geely Automobile's shareholder attributable profit reached 2.76 billion yuan in the third quarter, a year-on-year increase of 116%. From January to September, the company's shareholders' attributable profit reached 13.05 billion yuan, a year-on-year increase of 358%, further enhancing profitability.
Geely Automobile stated that in the first three quarters of this year, the entire brand has accelerated its transition to new energy and entered the "fast lane" of development: new energy vehicle models have emerged one after another, economies of scale continue to show, revenue steadily increases, cost optimization and operational efficiency improvements are significant, and profit levels have further improved. Looking ahead to the future, under the new global economic situation and industry transformation pattern, Geely Automobile will continue to promote strategic focus and integration, strengthen the technological barriers of electrification and intelligence, and accelerate the outbreak of new energy transformation