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Geely Targets U.S. Exports With Volvo-Developed Models in 2016

Geely Automobile Holdings Chief Executive Officer Gui Shengyue. Photographer: Jessica Hromas/Bloomberg
Geely Automobile Holdings Chief Executive Officer Gui Shengyue. Photographer: Jessica Hromas/Bloomberg

Aug. 26 (Bloomberg) -- Geely Automobile Holdings Ltd., whose parent owns Volvo Cars, said it plans to start exporting cars that it develops with the Swedish brand to the U.S. in 2016, a decade after founder Li Shufu first set the goal.

The Chinese automaker is banking on Volvo’s reputation for safety and reliability to help it compete in developed markets, after a previous attempt to break into the U.S. failed because of a lack in consumer recognition and confidence. Geely first took part in the Detroit motor show in 2006.

“Our acquisition of Volvo enhanced our image and overseas consumers are seeing us as an international company,” Gui Shengyue, chief executive officer of Geely, said in an Aug. 23 interview in Hong Kong. “Our deliveries in U.S. and Europe will be banking on those jointly developed models.”

Chairman Li had previously kept the Geely and Volvo brands separate on concerns that an association with a Chinese marque would diminish the Swedish automaker’s image. The joint models may help burnish Geely’s image as the Chinese carmaker seeks to become the country’s largest auto exporter.

“Overseas markets are very important to Geely and other Chinese automakers to help them boost sales and build their brands,” said Han Weiqi, an analyst at CSC International Holdings in Shanghai. “Even so, they still need to try even harder in their home market given the huge potential demand.”

Geely’s shares rose 3.9 percent to HK$4.01 in Hong Kong, the highest close in more than three months. The stock has gained 9.3 percent this year, compared with the 3.5 percent decline in the benchmark Hang Seng Index.

Overseas Push

The automaker said last week that it may become China’s biggest vehicle exporter this year with as many as 180,000 units in overseas shipments. Geely sold 100,800 vehicles abroad last year, lagging behind top-ranked Chery Automobile Co.’s 184,800 units, according to the China Association of Automobile Manufacturers.

Chinese automakers are stepping up their efforts to expand overseas as they face intensifying competition in their home market. The combined market share by Chinese auto brands fell to a five-year low in July, according to the auto association.

Automakers in China have a planned capacity to make 40 million vehicles by 2015, outstripping the projected domestic demand of about 27 million, according to the National Development and Reform Commission, the top planning agency.

Geely targets to have as much as 60 percent of its sales coming from overseas by 2018, Gui said. The automaker is planning to add a new sport utility vehicle model in China next year to better tap into the fast-growing segment, he said.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net

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