Opinion

Green leapfrog crucial to Geely's future

(China Daily)
Updated: 2010-08-04 14:44

The completion of Geely's buyout of the Volvo car brand from Ford Motor Co Monday is certainly a time to rejoice considering that this may be regarded as a pivotal moment in the global car industry's center of gravity shifting from the West to China.

This is definitely the largest ever takeover of a foreign carmaker by a Chinese company, and Geely is now well positioned to transform its leap of imagination into a real business feat.

Hopeful as it may be, however, the combination of a European luxury car brand famous for safety and quality with a fast-growing Chinese automaker excelling in tapping the world's largest auto market in itself does not guarantee future success.

Related readings:  Geely completes Volvo acquisition  The brand journey of Geely and Volvo  Geely car sales to reach 2m units by 2015  Geely to sell 150,000 Volvo cars in China by 2015

Of course, the domestic landscape has ample room for the Volvo brand since Chinese consumers' demand for luxury cars is projected to more than double in five years from the 300,000 vehicles sold last year.

During the first six months of this year, Volvo sold 15,497 cars in China, up 88 percent over last year - that contrasts sharply with its 5.2 percent and 9 percent year-on-year decline in sales in major markets like the US and Germany.

Yet, the far more demanding task for Geely will be to transition from a cost-efficient domestic carmaker to a multinational auto giant that will hope to eventually remodel itself into a leading green carmaker.

China has steadily embraced fuel-efficient and clean-energy cars over the years. If any automaker tries to excel only in being a top supplier of traditional cars, it will suffer sooner or later from its myopia. The success of Geely's ownership of a big luxury brand may therefore hinge on whether it can actually make that great green leap.