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Automobile Industry: The Case of Geely Motors
Liesl Martin & Royce Kuzwayo
Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
Chinese Automobile Industry
Automobile Production Statistics
Source: OICA
World Economic Outlook: Shift in Global Output
Structure of the world economy is undergoing a tectonic shift.
Source: World Bank, 2010.
Political Economy Issues: Growth Competitiveness Ranking
Losing competitiveness due to structural and political factors and the strength of the currency
Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
Geely Automobile Holdings Ltd
Hong Kong investment holding company, operations Hong Kong & China
Manufactures automobiles and automobile components through subsidiaries
12,282 Employees
Research, Production, Marketing & Sales
Brands: Free Cruiser, Geely Kingkong, Vision, Geely Panda
Produce under five key brand groups: Geely, Maple, Gleagle, Emgrand & Englon
6 Assembly manufacturing plants in China
Revenues Dec ‘09 CNY14,069.2 mill ($2,062.7 mill) 3 times 2008
Operating profit CNY1,252 mill ($183.6 mill) 2009 8 times 2008
Net profit CNY1,182.7 million ($173.4 mill) 2009 34.5% increase
8
(Datamonitor, 2010)
Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
Volvo Acquisition
• Biggest overseas acquisition by a Chinese automaker• 100% ownership of Volvo and related assets, including
agreements on intellectual property rights, supply and R&D arrangements
• Planned production 300 000 Volvo’s annually• Double original Volvo production capacity• Mainstream European brand vs domestic economy car brand• Building a successful partnership between Volvo and Geely will
require a solid plan for post-acquisition integration
Geely / Volvo Life-Cycle
Competitive Strategy
Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
Geely Competitors & Suppliers
14
Main:
•China Motor Corporation
• Dragon Hill Wuling Automobile
Holdings Limited
• Brilliance China Automotive
Holdings Limited
• Zhejiang Geely Automobile
Parts & Components Company
Limited
• Shanghai Maple Engine
Company Limited
• IAC Group (Interiors)
• Autoliv Inc (Airbags)
Competitors Suppliers
(Datamonitor, 2010)(Geely Annual Report, 2009)
Geely Customers
15
Customer base is diversified and fragmented
All customer transactions below 10% of the Group’s revenue
2009 sales from the largest and 5th largest customers respectively between 8% & 2%
Distributor networks: 45 countries 5 continents
500 retail distributors 600 service stations 300 dealers
Beijing 2010: Geely Alternative Power Insect Vehicle
(Datamonitor, 2010)
Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
Key Success Factors
Good relationships with Government
Expansion strategy
Adaptability
Gap analysis Similarities Differences
Geely was the only automobile company in 2009 awarded
“The State Technology Achievement Class 2 Award”
by Government for achievements in technological innovations
(Geely Annual Report, 2009)
Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
GDP: History of low growth volatility, 1994-2009 (Standard Deviation)
Conclusion
• The initial “Strategic Transformation”, new technologies and product launches strengthens the Group’s competitiveness positioning the company for further expansion.
• Important that they stay focused on their core business and not expand too fast too soon.
Thank You
Questions?
References
• Geely Annual Report. 2009. Geely Automobile Holdings Limited. http://hmdatalink.com/PDF/C00530/e00175(116).pdf
• Geely holdings limited http://www.marketlineinfo.com.ez.sun.ac.za/library/DisplayContent.aspx?R=DFE4AE0A-B587-4C04-8C21-2840BA1B6944&N=4294546488
• OICA http://www.oica.net/category/production-statistics/
• PingQing, L., HuaJie, S & Qiang, G. 2008. The Global Value Chain And China Automotive Industry Upgrading Strategy. Management Science and Engineering. 2(1), 11-19.
• Qin, F. & Huchen, X. 2006. The Management Strategy in GEELY Automobile Marching towards International Standard. College of Business and Administration Zhejiang University of Technology, P. R. China. 738-743.
