Geely profit climbs despite competition, regulatory scrutiny

[HONG KONG] Geely Automobile Holdings’ third-quarter profit rose as an ongoing discounting campaign turbo-charged sales.

Net income rose 59 per cent in the three months ended Sep 30 from a year earlier to 3.8 billion yuan (S$696 million), the company said on Monday (Nov 17). Revenue grew 27 per cent to 89.2 billion yuan, driven by a 43 per cent jump in vehicle deliveries.

Geely continues to streamline its network of businesses to refocus its energy to compete with rivals, including BYD and Xiaomi, in China’s ultra-competitive auto market. A long-running price war and the winding back of a national trade-in subsidy have weighed on the industry, while orders from regulators to pay suppliers faster have put pressure on cash flow.

BYD’s profits have suffered surprise declines in the past two quarters. The gap in China sales between the two has narrowed as Geely’s deliveries surged more than 50 per cent in the first nine months of the year on hit models such as the Xingyuan hatchback, China’s best-selling model. BYD’s domestic sales grew 5 per cent.

While momentum at home is strong, Geely’s exports are under pressure from plummeting sales in Russia, where spending has weakened and the authorities have hiked a fee on car imports. Overseas shipments fell 7 per cent to September, according to an earlier stock exchange filing.

But the company is ramping up expansion into other markets, such as the UK and Brazil, where it has formed a joint venture with Renault to make cars for the South American market. BLOOMBERG