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Daimler's profits fell sharply as a result of the "diesel door" incident, but BAIC and Geely were interested in the future of its automation and competed to acquire shares.

In just 12 months, Daimler has issued four profit warnings. In June, Daimler announced a cut in its profit forecast, the third time this year that Daimler has cut its profit forecast for 2019. Daimler had previously insisted that profits would increase in 2019 compared with the same period last year, but this time Daimler admitted that earnings before interest and tax in 2019 were expected to be the same as in 2018.

The latest profit warning came on July 12th, when Daimler expected a loss of 1.6 billion euros before interest and tax in the second quarter. The company said the increase in provision of about 1 billion euros was the main reason for the loss in response to the extension of the recall period related to Takata airbags. In addition, Daimler suffered a loss of 1.6 billion euros after government and court proceedings, as well as measures against Mercedes-Benz diesel cars.

According to relevant statistics, Daimler Group's revenue reached 39.7 billion euros, down 0.25% from the same period last year. EBIT fell to 2.8 billion euros from 3.3 billion euros last year, down 15% from the same period last year. Net profit fell 12.5% to 21 euros. Of this total, Mercedes-Benz sold 560800 vehicles worldwide, down 5.6 per cent from a year earlier, revenue fell 8 per cent to 21.2 billion euros, profit before interest and tax fell to 1.298 billion euros, and return on sales fell from 9 per cent to 6.1 per cent.

In May this year, Zetsche, CEO of Daimler Group, officially stepped down as global president of Daimler Group CEO and Mercedes-Benz Group, and Kang Linsong, director of research and development, replaced him as the new CEO. For the new Kang Linsong, it may be a little comforting for him to have BAIC and Geely competing for him.

On July 23, BAIC announced that in order to strengthen the long-term strategic cooperation between the two sides, it would invest in Daimler AG, which currently owns 5% of Daimler AG, including 2.48% direct shareholding and the right to obtain additional voting rights equivalent to 2.52% of the shares.

The move led to a complex triangular relationship between Daimler, BAIC and Geely. After the deal, BAIC became Daimler's third-largest shareholder, after Geely, which owns 9.7%, and Kuwait's sovereign fund, which owns 6.8%.

Daimler's current dismal state is largely related to the problems left over from the diesel emissions scandal. It is also predicted that the resulting costs may continue to rise after the company has solved the technical defects that caused the problem.

German authorities have ordered Daimler to recall 60,000 Mercedes-Benz diesel vehicles in Germany. Germany said the vehicles were recalled mainly because they tried to cheat with software to pass diesel exhaust tests, mainly the diesel version of the GLK 220s produced by Daimler's Mercedes-Benz between 2012 and 2015.

The main reason why Daimler expects profit before interest and tax in 2019 to be the same as in 2018 is due to government measures taken by the company to deal with diesel vehicles, which set aside as much as so euros, which will reduce Daimler's full-year profit forecast.

But profit is not the most important thing for Chinese car companies. BAIC and Geely seem to have their eye on Daimler's electric technology and pay close attention to the development trend of electric vehicle technology. While European investors are focused on Daimler's underpowered diesel past, Chinese buyers are more interested in Daimler's future electric car plans.

In March, Geely formed a joint venture with Daimler to produce an all-electric version of Smart. The German company has been launching the Smart mini-car brand for 20 years. Meanwhile, BAIC's joint venture, Beijing Mercedes-Benz, will focus on the heavier EQC and EQB electric cross-border SUV.

At a time when China's car market is in the doldrums, independent car companies and joint ventures are on the rise, and domestic market sales are squeezing profits, this cooperation is also of great significance. Daimler's development in electrification is second only to Volkswagen, and through Daimler's technology in electric vehicles, Chinese auto companies can reduce their own funding for research and launch more car products.

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