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China’s Geely Warns of Chip Shortage, But Keeps Vehicle Sales Target


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Company warns of a potential hit due to the chip shortage and the return of Covid in China, but retains its annual sales target


The Geely Auto logo is seen at the Auto China show in Beijing in April 2016. The Baidu-Geely JV Jidu Auto raised $400 million in January. Photo: Kim Kyung-Hoon, Reuters.

China’s Geely Automobile Holdings warned on Wednesday of a potential short-term performance hit due to a global chip shortage and a resurgence in Covid-19 cases, but kept its annual sales target, betting on new product launches.

The company’s upbeat forecast and strong first-half revenue growth helped send shares of the Hangzhou-based car maker up nearly 4%.

Geely posted a 22% rise in six-month revenue to end-June of 45 billion yuan ($6.94 billion), driven by an improved product mix.

Its total, vehicle sales rose 19% to 630,237 cars, underperforming a 27% growth in China’s overall passenger vehicle sales.

More than 90% of Geely’s vehicles are sold in China and the company has been pushing to increase exports in recent years, focusing mainly on Southeast Asia and Europe.

“We believe the rise in raw material prices should subside in the remainder of the year but the chip shortage could persist during the period,” Geely said.

New models

“Despite these, the upcoming launch of more new and competitive vehicle models should enable the Group to perform better in the second half,” the company said, maintaining its full-year sales target of 1.53 million vehicles.

Geely said six-month net profit grew just 4% to 2.38 billion yuan due to share-based payments of 641 million yuan.

Its parent Zhejiang Geely Holding Group, which has stakes in Daimler AG and Volvo Cars, created a new electric vehicle (EV) brand called “Zeekr” to consolidate its resources and better challenge in the highly competitive EV market. Geely said it would seek external funding for Zeekr and would introduce more electric models in its overall lineup.

The company, which abandoned a merger plan with Volvo Cars earlier this year, said the two firms would combine their powertrain operations and also jointly develop next generation EV architecture and autonomous driving solution.

• Reuters and Jim Pollard

 

ALSO SEE:

Geely and Renault Hook Up For China Hybrid Vehicle Venture

Geely-Backed EV Battery Buying SPAC Falls After Deal

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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