Geely gets in high gear
- Source: Global Times
- [08:19 January 20 2010]
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Factory workers assemble a Geely Gleagle SUV at its Chengdu plant last October. Photo: IC
By Chen Xiaomin
Boosted by new financial backing including Goldman Sachs' $334 million investment and its pending Volvo purchase, Zhejiang Geely Holding Group has unveiled some of its ambitious expansion plans to boost sales at home and overseas.
On January 16, Geely Group announced it would work with the Lanzhou city government, Gansu Province to expand its production base.
The Group's Hong Kong-listed Geely Automobile Holdings was China's 10th largest carmaker last year. It sold 330,000 vehicles, a 48 percent year-on-year hike, realizing 1.65 billion yuan ($241.73 million) in sales revenue, up 28 percent from the year before.
Expanding in Lanzhou
Geely Group said in a statement the expansion plan is needed to "adjust the industry layout at home and abroad, and explore markets in west China, Central Asia and East Europe."
The Lanzhou plant, built in 2006, was originally designed to produce 50,000 vehicles yearly, mainly its Free Cruiser model. Its targeted markets were west China, Central Asia and East Europe, though vehicles produced there still hadn't been sold overseas as of last year.
The factory made 18,000 vehicles, and harvested 600 million yuan ($88 million) in sales revenue last year. However, it still was in the red as of 2009.
However, Geely Group has injected an additional 2 billion yuan ($293 million), with plans to produce 100,000 units annually of Free Cruiser by one of its three sub-brands, Gleagle, and have another sub-brand, Emgrand, produce 20,000 unidentified models per year via SKD (semi- knocked-down) assembly.
The group's chairman Li Shufu said the expansion will make full use of western China's plentiful raw materials, boost local auto parts suppliers and include several more from other provinces to lower the costs.
Jia Xinguang, an independent auto analyst, pointed out in his blog on sohu.com that the location has excellent geographical and logistical advantages.
