Geely sees oil prices driving up demand for its fuel-saving autos
Updated: 2008-06-24 07:30
By Hui Ching-hoo(HK Edition)
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Geely Automobile Chairman Li Shufu is not only brushing off the rising crude prices, he's banking on the hikes helping his company.
"The price rise of crude oil will cause more drivers to switch to fuel-saving and low-emission vehicles," Li said. "In that respect, Geely's product mix could feed the market demand."
He conceded that oil hikes are putting mounting pressure on the mainland vehicle industry, but his goal is for the company to mitigate the impact with the shift in its marketing strategy.
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Geely says it will start cutting back production of its low-end automobiles in August, with plans to completely phase out the vehicles this year. AFP |
He noted that Geely will phase out its low-end products and increase its exposure in the mid- and high-end sectors.
"Productions of three of our low-end models will ease in August. The spectrum of our products will be 100 percent mid- and high-end orientated by the end of the year."
Looking ahead to the next two years, the company plans to roll out seven new models with price tags between 50,000 and 200,000 yuan. That includes a series of "green air" vehicles.
But Li said the company hasn't decided on the production level of ethanol-fueled vehicles, saying it depends on the country's environmental policy in the future.
Company executive director Gui Shengyue said the company hit 40 of its whole-year sales target by the end of May - a 30 percent year-on-year increase.
"We are positive that the company can hit the target of 230,000 units for the whole year," Gui said.
Regarding the company acquiring a 44.19 percent stake in each of the five affiliates of its parent group, Li said the acquisition will raise Geely's interest in each affiliate to 91 percent.
The deal could significantly boost the company's profits in 2008, compared with the net profits of HK$310 million in 2007.
Geely's market capitalization is estimated to increase 25 percent to about HK$5.9 billion as a result of the acquisition.
Li said the acquisitions won't worsen Geely's financial muscle, saying the company does not run up any debt. Plus, he added, the cash liquidity of the affiliates could offset their arrears.
Geely is looking into expanding into overseas countries such as Mexico, but Li said the company is still studying the feasibility of such a move - based in part on what concessions the Mexican government makes.
"The size of the project is very large," he said, "and we don't have a concrete timeframe for when it will be kicked off."
(HK Edition 06/24/2008 page2)