Shanghai (Gasgoo)- The destiny of future auto industry depends on the self-realization of traditional automakers, Li Shufu, Chairman of the Zhejiang Geely Holding Group, delivered such statement through some English and German media. He thinks that the key to win the future is that companies join hands together to build sharing digital platforms and form online advantages.
By the end of April, vehicle manufacturers around the world will gather in Beijing at Auto China 2018 to showcase their latest products, technologies and services. The theme “steering into a new area” reflects the auto industry's major challenges- like new disruptive technologies, stricter regulations, and changeable ownership.
In the past 20 years, the auto industry has long been shaped by Charles Darwin's theory of evolution, only the strongest survive. Some manufacturers with low efficiency and immature scale, like Pontiac, Daewoo, Rover, Saab, Oldsmobile, Mercury and Saturn, had gradually disappeared. New operators with new business models like Didi, Uber, Waymo and Tesla have joined as replacement.
Meanwhile, China, the world's largest auto market, has created a number of new brands, including the brands built by technology entrepreneurs, like NIO. Chinese automakers are scrambling for market shares, and many of them have teamed up with international companies. Currently, China has owned 185 million vehicles on the road and a potential to sell another 30 million vehicles this year.
However, the sales growth of the Chinese auto market cannot deal with the further challenges, such as traffic jam and pollution, brought by new brands’ intrusion and new disruptive technologies. Meanwhile, the regulations have become increasingly stricter. For example, China's government stipulates that in 2025, the sales of low-emission new energy vehicles (NEV) should account for at least 20% of total auto sales in this country. Meanwhile, Chinese consumers also want vehicles that are cleaner, smarter and more connected.
Thereby it is necessary to consider going beyond the national borders. Geely Holding Group has also realized that.
By the end of 2017, Geely had agreed to become the largest owner of AB Volvo with 8.2% of the shares and 15.6% of the vote. In February this year, the Chinese company acquired 9.69% shares in Daimler and became the largest shareholder of the German automaker whose founders created the internal-combustion engine more than a century ago.
Today, the future of inter-combustion engine is in dispute, while new technologies own the power to utterly reshape the whole industry. In the future, new cooperation and innovation methods are necessary and to fight alone is no longer feasible for auto companies.
Geely's investment in AB Volvo and Daimler are for the sake of meeting challenges and lowering competition risks. Li Shufu said the company must develop online digital technology solutions under the premise of strengthening the hardware manufacturing merits. Additionally, the transformation requires more participants to cooperate in the development of new technologies and common systems. Meanwhile, partnerships should be transparent and legal without damaging the companies' independence.
He showed that the major challenge of the current industry is making a sustainable and profitable development in this reforming era. Apart from respecting each other's brand independence and management autonomy, companies should seek synergy globally to produce scale industry effect and lower risks.
Besides, Li stated that the platform-based economy will become an unstoppable trend in auto industry. The companies that persist in solitary development will be devoured by the general trend, while the companies that join forces will be the winners of the future.
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