Geely Automobile Holdings, the flagship company of billionaire Li Shufu’s automotive empire, reported earnings higher than analysts’ expectations and projected that this year’s sales would increase even further.
The company announced on Tuesday that its net income increased by 9 percent to 5.26 billion yuan (USD764 million) in 2022, which was higher than the average estimate of 4.85 billion yuan made by analysts, according to data compiled by Bloomberg.
The total revenue reached 147.96 billion yuan, representing a 46 percent increase.
Geely to focus on NEVs
Even though revenue was up, the company needed to maintain its previous level of profitability due to rising costs of batteries, chips, and other parts, as well as investments in Zeekr, the company’s new brand of electric vehicles.
“During the year, the group sharpened the operational focus on new-energy transformation and significantly accelerated the pace toward this end.
The sales volume of new-energy vehicles sold by the group’s two 50 percent-owned joint ventures increased drastically.”
Geely
NEVs, which account for a larger proportion of the company’s lineup, have lower margins than gasoline-powered light vehicles, which also have lower margins than diesel-powered light vehicles. According to Geely, the gross margin dropped by three percentage points to 14.1% in the previous year.
The company has set a sales goal for 2023 of 1.65 million units, an increase of 15% from the previous year’s target. According to the statement, it will keep leveraging its partnerships with companies such as France’s Renault SA to promote foreign growth. Autonomous driving and exports are two areas where it sees new growth opportunities.
EVs are growing in the Chinese auto industry
The number of goods shipped abroad by the company, with its headquarters in Hangzhou, increased by 72% in the past year, reaching just over 198,000. Geely’s revenue comes from sales in China, which increased by only two percent to 1.23 million vehicles sold.
Electric vehicles are the most rapidly expanding subset of China’s automobile industry, and Geely is scrambling to catch up.
Although its EV sales increased by 300 percent compared to 2021, they only totaled 82,100. That is a relatively small number compared to the 1.86 million electric vehicles (EVs) and plug-in hybrids that market leader BYD Co., which has discontinued production of gasoline-powered vehicles, sold.
On Tuesday, Geely Executive Director Gui Shengyue commented about BYD at a briefing with investors and media.
“Geely has lost our crown of being the No. 1 Chinese homegrown carmaker to our excellent peer who has created some distance between us.”
Geely Executive Director Gui Shengyue
The Chinese market is also becoming increasingly difficult; compared to the same period last year. Sales of light vehicles were down during the first two months of the year, and automakers are currently embroiled in a price war.
Geely’s partnerships
Gui admitted that Geely had made some strategic blunders, such as pushing a hybrid that was unsuccessful. Still, he stated that the company is optimistic that it can progress with electric vehicles.
In an effort to close the gap, Geely is drawing on the resources provided by the empire founded by Li. Zeekr, the company’s high-end electric vehicle line, was released in 2021.
It shares a design group based in Gothenburg with Volvo, which is majority-owned by Geely. Zeekr achieved a healthy sales volume of 71,000 units in 2022; this year, the automaker plans to launch additional models and increase the sales goal for Zeekr to 140,000.
While Geely has two joint venture projects with Renault, Li is one of the most prominent shareholders of Mercedes-Benz Group and Aston Martin Lagonda Global Holdings, respectively.
In February, the company also introduced a new electric vehicle (EV) product line known as Galaxy under the Geely brand. The company plans to release seven plug-in hybrids and battery EVs over the next two years.
See Also:
- Geely unveils its latest EV brand Galaxy in China
- Geely Automobile unleashes 72 satellites in three years for fully autonomous driving
- Geely’s Zeekr introduces an EV appraisal platform as used vehicle sales grow
- Geely will debut its mid-to-high-end NEV brand as its first offering on February 23
- Geely’s Lotus is going public via SPAC at a valuation of $5.4 billion
