BIZCHINA / Li Shufu
Geely's 80% hike in sales target
By Vincent Lam (HK Edition)
Updated: 2005-04-29 07:35
China's privately-owned auto maker Geely Automobile Holdings is set to
raise its sales target by 80 per cent this year and expand its exports
despite a disappointing result last year.
Geely plans to produce and sell 120,000 vehicles this year, up from
66,057 last year.
It sold 28,670 vehicles in the first quarter this year, close to one
quarter of the full-year target.
To support the rapid sales expansion, Geely has lifted its production
capacity by 50 per cent to 300,000 vehicles and plans to further double
to 600,000 by 2007 with the expansion of its Ningbo plant.
The company hopes to raise its mainland market share to 5 per cent this
year from the current 4.2 per cent.
And it aims to sell 9,000 vehicles in the Middle East and Africa after
exporting 5,000 to Syria in 2004.
Asked whether it would explore the US market as well, Executive Director
Lawrence Sui Lun Ang said that some US firms have expressed interest in
the company's cars. However, the company has to study if it can match the
US standards.
"Developing the export market is the company's medium-and-long-term
strategy," Ang stressed.
Capital expenditure for 2005 is HK$700 million, up from HK$600 million in
2004.
Geely scaled down its capital expenditure last year from an initial HK$1
billion in the face of a downside in the mainland car market.
As a result, the expansion of its Ningbo plant was postponed until this
year.
Despite 139 per cent sales growth last year, the average sales price
dropped by 10 per cent due to the acquisition and selling of the
lower-end Haoqing series.
Net profit per vehicle thereby decreased 42 per cent to HK$3,046 and
gross profit per vehicle slipped by 8 per cent to HK$5,283.
Net profit for the second half of 2004 plunged by 44 per cent from HK$54
million in the first half to just HK$30 million.
Full-year profit rose 47 per cent to HK$84 million, lagging far behind
the HK$133.8 million of Reuters estimates.
Turnover increased by 3 per cent to HK$41 million.
"The Chinese car market was in general in downside for the year 2004, but
vehicles priced at under 80,000 yuan (US$9,600) are still highly
favourable to the market," Ang said.
According to a report conducted by the National Bureau of Statistics,
released last Friday, vehicle sales on the mainland shrank by 2.8 per
cent to 566,900 in the first quarter of 2005 compared with the same
period last year.
On a monthly basis, vehicle sales in March dropped by 1.6 per cent to
246,000 against the same period last year. "The market is basically just
supported by the sales of low end vehicles," the report said.
Ang expected that it would sell 60,000 Haoqing series this year, with its
share in total sales accounting for 50 per cent.
Shares in Geely rose 1.11 per cent to close at HK$0.455 yesterday after
having lost 44.5 per cent in the past year .
(For more biz stories, please visit Industry Updates)
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