Geely: Global strategy after Volvo acquisition

A Volvo PHV/EV and new factories for Geely brands in Shaanxi are among its plans

2013/01/10

Summary

 Zhejiang Geely Holding Group Co., Ltd. changed its management policy starting in 2007 from low-end vehicles that put emphasis on low-price and sales volume to mid-size highend vehicles that emphasize safety and product quality. Geely took a stake in and started joint production and sales with UK-based MBH (Manganese Bronze Holdings PLC), and acquired Australia-based major transmission manufacturer, DSI (Drivetrain Systems International Holding Pty. Ltd.), and also acquired Volvo Car (hereinafter called Volvo) from Ford in 2010. By acquiring world-class technology, with a slogan of high-quality and safety, Geely aims to operate in China and worldwide and expand business of its own brand vehicles globally.


Sales volume by Geely Holding Group (factory shipment) At the end of 2011, the ownership of Geely's own-brand passenger cars in China exceeded 2.2 million units. Between 2008 and 2011, the growth rate of own-brand passenger cars sales including production volume of overseas knockdown (CKD/SKD) and export of vehicles shrank substantially (from up 48.4% year-on-year in 2009, to 26.5% in 2010, and further to 4.0% in 2011). In 2012, the entire sales volume increased due to rapid growth of exports, while sales of vehicles made in China showed a slight sluggishness in China. In 2012, Geely sold 480,000 units, which are up from the initial plan at the beginning of the year of 460,000; among the sales volume, exports and sales from overseas knockdown (KD) production are estimated to increase by 20,000 units from the initial plan at the beginning of the year to 100,000 units.

 Geely says that it will increase its global sales target from about 480,000 units in 2012 to 2 million units, more than three times, in 2015 (it is unknown whether the target figure includes Volvo's target sales volume or not). Among them, Geely will boost domestic sales in China from about 380,000 units in 2012 to 700,000 units in 2015 and exports of vehicles made in China and sales of vehicles made abroad from about 100,000 units in 2012 to 1.3 million units.

 Geely executives backtracked on its remarks on the 2015 global sales target of 2 million units; they initially said that exports of vehicles made in China and vehicles made abroad would account for two thirds of the targeted sales volume, which was changed to account for 50%. This shows the difficulty of achieving the target.


 The following summarizes the medium-term business plan each of Geely's own-brand business and its subsidiary, Volvo, technological alliance and preparation of production and sales network in China including expansion of production facilities, and the latest activities including model plans.

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