Mercedes’ parent Daimler agrees 50/50 deal with Geely for SMART

Daimler has agreed a 50:50 joint venture with China’s Geely which will see the two jointly own the Smart Brand as production moves to China.

Yesterday we reported that Geely are to take a 50 per cent stake in Smart as Daimler looks to unload the loss-making brand. And that’s exactly what’s happening.

Despite reports in the German press that Daimler were going to shut Smart down, the new deal keeps it very much alive, but as a maker of electric cars designed by Mercedes but built in China, and with plans to move in to the B-segment too.

The plan sees Daimler continuing with the current Smart production in France (and Slovenia) until 2022 when production will move to a new purpose-built factory in China.

The development of the new generation of Smart cars which will come out of China will see Mercedes doing the designing and Geely the engineering, with a new compact electric Mercedes filling the production gap when Smart leaves Hambach. The board of directors for the new joint venture will be made up of three representatives each from Daimler and Geely.

Dieter Zetsche, Mercedes boss, said:

We will jointly design and develop the next generation of smart electric cars that combine high-quality production and known safety standards for sale both in China and globally. In the future, we are looking forward to working with all partners to sustain our success in China and worldwide. Separately, Mercedes-Benz will produce a compact electric vehicle at the Hambach plant, sustaining employment with further investment in the facility.

It’s a much more sensible route than shuttering Smart, but it will be interesting to see if Geely can make Smart profitable. Something Daimler and Swatch have failed to do in more than two decades.