Geely:Launching new LYNK & CO brand in 2017, sales target of 2 million units in 2020

Expanding production capacity, accelerating development of new energy business

2017/05/11

Overview

Geely sales volume

  Zhejiang Geely Holding Group Co., Ltd. (Referred to as the Geely Group below) is an automotive Group company that both produces and sells passenger and commercial vehicles with the 8th (2016) highest sales in China (number of plant shipments). It boasts the second largest number of sales among non-state owned companies following Great Wall Motors.

  The Geely Group's predecessor was a refrigerator component plant that Li Shufu, the founder and the chairman of the Group, established in Zhejiang Province in 1986. It began operating in the coastal area of Taizhou City, Zhejiang Province after obtaining an automobile manufacturing license in 1997.

  In 2005, Geely Automobile Holdings Limited (Referred to as Geely Automobile below), which owns the Geely brand, was listed in the Hong Kong Stock Exchange. Upon achieving that milestone, it started to actively acquire companies overseas. It purchased Drivetrain Systems International, an Australian automated transmission producer, in 2009; Volvo Cars in 2010; and The London Taxi Company in 2013.

  The automaker reviewed its brands and sales channels in 2014. As a result, the main brands currently under the umbrella of the Geely Group were unified under Geely or Volvo. In 2016, the OEM announced LYNK & CO, a new global brand targeting young people. The joint ventures (JV) KANDI, which handles EV city commuter and compact EV models, ZD, which deals in EV city commuters, were spun off from Geely Automobile in 2016 as a new JV subsidiary.

  Geely Automobile sold 760,000 units in 2016, a 50% year-over-year (y/y) increase, by reviewing the vehicle structures of Geely brand models and increasing the number of SUV models it offers. Net sales increased by 78% to RMB 53.7 billion and net profit rose 126% y/y to RMB 5.17 billion, both of which were record highs. In 2017, it set a sales volume target of 1 million units and aims to achieve this goal by introducing a new SUV and MPV, as well as a hybrid vehicle and PHV, and launching "LYNK & CO 01," a new brand model targeting the global market. It will also increase the number of new energy vehicles (NEVs) it offers and aim for sales of 2 million units (includes LYNK & CO, excludes Volvo Cars, KANDI, and ZD) by 2020. Geely Automobile is expanding the existing plant in Zhejiang Province where its Group headquarters is located. It is constructing the new plant at a frenzied pace in order to launch it for producing new energy vehicles.

  This report will mainly focus on Geely Automobile, a subsidiary of the Geely Group, but will also take a brief look at the Volvo brand.

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