Geely sees speed bumps ahead as its car sales and earnings sputter while China’s economic engine loses power
- Geely sold 44 per cent fewer cars in December, compared with the same month in 2017, as a trade war with the US and China’s economic slowdown gave customers cause for pause
- China’s car sales sputtered last year, falling 2.8 per cent, the first annual decline since 1992
Geely Automobile Holdings, whose founder Li Shufu is the largest single shareholder of Daimler, said sales of its portfolio of brands including Lynk and Volvo are likely to remain flat this year in China, as economic growth slows down in the world’s largest vehicle market.
The Zhejiang-based carmaker sold 44 per cent fewer vehicles in December, causing Geely to miss its 2018 sales target by 5 per cent.
Car sales in China sputtered last year, as three decades of double-digit percentage growth spurred the nation to surpass the United States in 2009 as the largest vehicle market on earth. Sales last year fell 2.8 per cent, as a slowing economy and a trade war with the US gave consumers cause for pause in committing to their biggest non-real estate purchases.
Sales slid further by 9.8 per cent in the first two months of the year – traditionally the season when customers flocked to showrooms to mark Lunar New Year celebrations with a new car – compared with the same period in 2017.
“The prevailing political and economic uncertainties should continue to affect the passenger vehicle market in China and could cause the current slowdown in motor vehicle demand to continue into 2019,” Geely said in its earnings report, adding that sales would remain flat this year.
Still, 2018 sales rose 20 per cent to 1.5 million units, driving up Geely’s revenue by 14.9 per cent to 106.6 billion yuan. Net profit jumped 18 per cent to a record 12.55 billion yuan (US$1.88 billion), in line with the 12.59 billion yuan expected in Bloomberg’s survey of 26 analysts.
