Geely, with Volvo and Daimler under its hood, says it has global reach to take on competitors
Zhejiang Geely Holding Group, owner of Volvo Cars and shareholder of Daimler AG, said it has all the production facilities ready around the world to take on local and international competitors in the mid-to-high end passenger vehicle market.
The company’s listed unit Geely Automobile Holdings, China’s largest non-state owned carmaker, more than doubled its 2017 net profit to 10.63 billion yuan (US$1.68 billion), beating its own forecast, while revenue jumped 73 per cent to 92.76 billion yuan.
“Our overseas strategy is starting to see some fundamental changes as we move from simple trading and assembling of SKD (semi-knock-down) kits towards the localisation of production,” said the parent company’s president An Conghui, during a press conference. “Through localisation, we can bring our products and technology overseas and reap tremendous cost advantages.”
Zhejiang Geely’s recently commissioned factory in Belarus will target the vast Russian market, and it will transfer products and technology to Malaysia’s struggling state-backed car maker Proton so that the Chinese firm “can quickly penetrate the Southeast Asian market,” he said.
The biggest globalisation move this year of the company - which already has the biggest-selling domestic brand in China with a 5 per cent share - will be the launch of its “Lynk & Co” brand of sedans and “crossovers” that combine features of passenger cars with those of sport utility vehicles, An said.
They are made by Lynk & Co, a recently formed joint venture in which listed Geely Auto has a 50 per cent stake, and the remainder split between the parent and the parent’s wholly-owned Swedish unit Volvo Cars.
Geely Auto contributed 3.75 billion yuan of capital toward the venture.
Having shared research and product development resources - including components and technologies cross-licensing - to develop a new generation of products, Lynk and Volvo brands will have “clear” market positioning, An said when asked if their markets will overlap.
“Lynk & Co cars will target the 43 per cent share of the China market currently occupied by the likes of Toyota, Honda and Volkswagen, while Volvo will focus on the luxury end of the market,” An said, adding Lynk will also penetrate the European market this year.
Geely last month amassed a 9.69 per cent stake in Daimler to become the largest shareholder in the German carmaker.
Automobile Holdings, the listed flagship of mainland rags-to-riches self made tycoon Li Shufu, has set a target to raise sales by 26.4 per cent to 1.58 million units - including 150,000 Lynk products - after a 63 per cent jump last year.
Geely Auto’s chief executive Gui Shengyue expects Lynk & Co to break-even this year. It sold over 6,000 units last year.
Geely shares Wednesday closed 6.2 per cent lower at HK$25.8 after the results was released at noon, after surging 132 per cent in the past 12 months.