Volvo’s Chinese owner Geely expands into Europe and Southeast Asia, undeterred by trade war
The mainland’s third-largest carmaker says it will start selling Lynk & Co cars, co-developed with Volvo, in eastern Europe in 2019
Zhejiang Geely Holding Group, a leading mainland Chinese carmaker and owner of Volvo, vowed to press on with its expansion into global markets undeterred by the US-China trade war, company officials said on Wednesday.
The company would start to sell its Lynk & Co brand cars in eastern Europe as early as next year, and had already set up the framework of a feasibility study on cooperation with Malaysian carmaker Proton to enter Malaysia, said Gui Shengyue, chief executive of the Hong Kong-listed subsidiary Geely Automobile Holdings.
“Our expansion into the Southeast Asian market this year and the European market next year will not be affected by the trade war,” said Gui.
Geely Holding president An Conghui projected that production capacity and sales of the Lynk & Co models, co-developed with Volvo last year and produced in Belgium to target young buyers in the European markets, would grow substantially in 2019 after the company resolved the problem of engine shortages in January.
Of the total 571,577 Volvo vehicles produced in 2017, only 14.2 per cent of them, or 81,504 units were sold in the US, which also represented a 1.5 per cent decline from the previous year’s volume. Geely’s Chinese plants produced 21 per cent of the total vehicles.
The rising company has made its global ambitions clear over the recent months.
It set up a joint venture in the mainland with Proton earlier this month, after acquiring a 49.9 per cent stake last year in Malaysian carmaker to expand into the Malaysia and Southeast Asia.
In February, the company’s founder Li Shufu quietly amassed a 9.69 per cent stake in the German carmaker and parent company of Mercedes-Benz Daimler AG, a move that caught market regulators by surprise.
Geely Holding has just become the third-largest carmaker in China, the world’s largest automobile market, after selling 766,630 vehicles in the first half of this year. It now trails only Volkswagen AG and General Motors in its home market over the period.
Its share of the domestic market rose to 6.4 per cent in the first half of this year from 5.1 per cent last year, even though overall car sales slowed with the economy in China this year.
On Wednesday, Hong Kong-listed Geely Auto posted a 54 per cent jump in first-half profit, driven by strong sales of its SUV models.
Net profit climbed to 6.7 billion yuan (US$970 million) for the first six months of this year from 4.3 billion yuan in the same period last year, beating the forecast of 6.6 billion yuan by analysts polled by Thomson Reuters.
Revenue rose 36 per cent year-on-year to 53.7 billion yuan for the first half of this year, while total sales volume went up 44 per cent to 766,630 units.
The firm expects to exceed the full-year sales volume target of 1.58 million vehicles in 2018, and aims to reach the target of two million units in total sales volume by 2020.
Shares of the company closed up 1 per cent at HK$16.54 on Wednesday after the results announcement.