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Tencent drives deeper into the auto sector, forming JV with carmaker Guangzhou Automobile

Written by Song Jingli Published on 

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Carmakers also need to balance “metal and mobility”

Guangzhou Automobile Group (GAC), a Chinese automobile maker, said it will form a joint venture with a Tencent subsidiary, Tencent Mobility Limited to establish a mobility platform, a filing with the Shanghai Stock Exchange revealed Friday. Tencent is evidently trying to get a slice of the “Mobility as a Service” sector.

GAC takes a 35% stake in the JV with an expected investment of RMB 1 billion ($148.5 million), while Tencent Mobility, which was set up in Hong Kong in 2012 to develop applications for music streaming, restaurant exploring, and dining experiences, holds a 25% stake. Guangdong Public Transport Group holds a 10% stake, while another 10% stake will be reserved as employees incentives. It added that other investors hold the rest 20% stake, with each of the unnamed investors holding no more than a 5% stake, but did not name them.

Global consulting group PwC predicted in its Digital Auto Report 2018 that carmakers must balance “metal and mobility” as more people worldwide prefer on-demand mobility service than owning a vehicle.

PwC added that the United States mobility-as-a-service market would be worth $250 billion by 2025, compared with $47 billion in 2017, but China could be a much bigger opportunity by 2030.

Pushed by this incoming mega-trend, that involves shared, autonomous,  on-demand, and electric mobility services,  numerous automakers are seeking alliances with internet companies including Baidu, Didi, Alibaba, and Tencent. Tencent itself has already made investments in this direction and is one of the prominent backers of electric vehicle startup Nio.

Guangzhou Automobile is keeping up with the trend, even though it’s doing well in its core business of selling cars. In 2018 it sold 2.15 million cars in China, up 7.34% year-on-year, against the country’s sluggish auto sector which saw 28.08 billion cars sold in total, down 2.8%, the first-ever negative growth in 28 years.

Editor: Nadine Freischlad

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