BIZCHINA / Biz Media Digest
Auto:Geely in JV to make taxis for London
(China Daily HK Edition)
Updated: 2006-11-10 15:09
Geely Automobile Holdings has entered a developed economy's market
through a US$54.3-million deal with Manganese Bronze Holdings Plc to
produce taxis for London from mid-2008.
The joint venture agreement signed yesterday would make Geely the largest
shareholder of Manganese Bronze with 23 per cent of its shares and two
seats on its board.
The two companies' target is to produce about 40,000 cars a year at their
joint-venture plant on the mainland: about 10,000 London cabs and 30,000
limousines or sedans.
"We look to export components back to London and vehicles to all of the
cities across the world," said Manganese Bronze finance director Mark
Fryer.
The deal highlights the global ambition of the mainland's largest
privately owned carmaker, which now assembles sedans in Indonesia and is
trying to enter the US market, too.
The refrigerator-maker-turned-auto firm has encountered a fierce business
environment over the past two years because of overcapacity, price cuts
and rising material costs. To overcome the crisis, many automakers,
including Zhejiang-based Geely, sought to expand overseas.
The mainland became a net vehicle exporter last year, selling 172,800
units. The sales were boosted mostly by the performance of Geely, Chery
Automobile and Great Wall Motor.
Developing markets such as Indonesia, the Middle East, Egypt and Russia
are their top target, with cheaper vehicles comprising the majority of
their exports.
But mainland firms now not only deliver complete vehicles overseas, but
have also moved their production units abroad.
Geely, which started out 20 years ago, now has a joint venture in
Indonesia for 1.1-litre, 1.3-litre and 1.5-litre cars.
Great Wall Motor, which specializes in vehicles that can withstand rough
roads and inclement weather, is planning to invest US$70 million to set
up a plant in Russia.
Export, output target
Geely could end up exporting 20,000 cars this year, and has plans to
double that figure in 2007, Chairman Li Shufu had said in September. And
it seems to be moving towards fulfilling this year's target.
Also, the automaker plans to more than double its annual output from
300,000 this year to 650,000 in two years. In the first half of the year,
it's two units (in which it holds 48.6 per cent each) sold 91,953
vehicles, an increase of 60 per cent year on year, which accounted for 51
per cent of its annual sales target of 180,000 units. The rise is lower
when the figure for the first eight months is taken: 48 per cent more, or
112,633 vehicles.
Geely shares were flat in Thursday morning trade at HK$0.89, before being
suspended in the afternoon.
(For more biz stories, please visit Industry Updates)
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