China Buys 50% Stake In German Carmaker

Just a few days ago we reported that Daimler-Benz, parent company to both Mercedes-Benz and Smart, was planning to decide by the end of this yearwhether or not to sell, keep, or discontinue the Smart brand entirely. Today is has been officially announced that Daimler has made a deal with China's Geely Automobile Holdings to sell a 50% stake in Smart.

The two automakers are forming a 50-50 globally focused joint venture to own, operate and further develop the Smart brand, which will consist of EVs only. The choice of Geely is not without precedent. Last year,Geely bought a nearly 10% stake in Daimler at a cost of $9 billionto become its biggest shareholder.

Daimler was previously having difficulty marketing and selling Smart cars not only in North America but also in other parts of the world. Last year, its global sales dropped by 4.6 percent. An industry analyst estimates Smart will lose 500 million euros to 700 million euros annually at this rate.Daimler was already in the process of converting Smart into an all-electric brandwith a focus on urban mobility, two factors that have a big appeal in China.

Chinese automakers also happen to be investing heavily in electrification in an effort to curb heavy pollution caused by fossil fuels. The populations of major Chinese cities have also swelled, but people still need to get around town somehow.