Geely to boost exports as domestic sales slow

PUBLISHED : Thursday, 11 September, 2008, 12:00am
UPDATED : Thursday, 11 September, 2008, 12:00am


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Geely Automobile Holdings, the mainland's largest privately owned compact carmaker, said it would boost exports to maintain stable profits in the second half amid slower sales on the mainland.

Exports accounted for 19 per cent of Geely's sales in the first half, up from 8 per cent in the same period a year earlier. The company aims to have exports make up about 30 per cent of its sales next year.

'Russia is the main sales driver of our export business,' said executive director Lawrence Ang Siu-lun. 'We need to diversify our sales in different parts of the world to maintain steady profitability instead of relying on one market only.'

Geely's net profit surged 217 per cent to HK$216 million in the first half, due to strong sales of its more expensive Vision sedan and an HK$18 million fair value gain from a 5-year zero-coupon convertible bond.

The company sold 106,948 vehicles in the first half, up 27 per cent from a year earlier, generating HK$72 million in revenue, an increase of 10 per cent.

Passenger car sales on the mainland fell 6.24 per cent to 451,300 units last month, the first month-on-month dip in more than three years as the Olympic Games and a weaker economy delayed purchases.

Still, Geely expects to sell 230,000 units this year, up 27 per cent from 2007. That includes 50,000 units for exports, 1.5 times more than the 20,000 units last year.

The company in June said that the Ministry of Commerce had approved the HK$1.6 billion injection of production plants by its parent company. It would fully book earnings from the parent's assets from July.

Assuming the assets had been consolidated in the first half, Geely's profit would have amounted to HK$520 million on revenue of HK$4.7 billion.

Geely will start selling more expensive and technologically advanced models by the end of this year to boost profitability.

'We've already stopped producing vehicles with a price tag of 40,000 yuan [HK$45,620] or less because we understand that low-price vehicles should not be the way to gain a reputation in the market,' chairman Li Shufu said.

Geely said higher-priced new models including the Free Cruise, King Kong and Vision, accounted for 72 per cent of sales in the first half, up from 59 per cent from a year earlier.

The company will launch six new models priced at between 50,000 yuan and 100,000 yuan in the second half.

Geely shares rose 3.18 per cent to 65 HK cents yesterday.