Hangzhou-based Geely hopes to get a footing in the region by partnering with Malaysia’s Proton Holdings.
Reuters recently reported that as part of its pitch to Proton’s owner, DRB-Hicom Bhd, Geely, which owns Sweden’s Volvo Car Group, said it could offer Proton some of the latest vehicle technologies it had developed with Volvo’s input.
DRB-Hicom said early last month it was waiting for prospective foreign carmakers to submit bids for a strategic partnership.
If Geely manages to win the bid, it will get access to Proton’s assembly plant in Malaysia with annual production capacity of 150,000 units. More importantly, it will be able to make duty-free shipments of cars anywhere among the 10 Asean countries, according to media reports.
Asean has a combined population of 623 million.
According to a Forbes report Tuesday, Southeast Asia consumers bought an estimated three million cars in 2016.
Indonesia, Thailand and Malaysia are the regions’ most important markets, selling between 600,000 and 1.2 million cars a year. Next in market size are the Philippines and Vietnam, said the Forbes report
The report said Geely’s aggressive move was significant because GM and Ford were retreating from the region. In 2015, GM and Ford both withdrew from Indonesia, the region’s largest market, citing “no path to profitability”.
Ford, GM and Fiat Chrysler Automobiles NV were also scaling back plans in Thailand, Vietnam and the Philippines, the report added.
The Forbes report said Geely’s confidence was based on several factors:
- Sales of Geely cars and SUVs jumped 50% in 2016 to a record 766,000 and the Hong-Kong listed company expects sales to surpass one million this year;
- Geely’s net profit in 2016 increased by more than 100% over 2015 levels to US$660 million;
- Geely is now China’s largest private carmaker after Great Wall Motors; and
- In October, 2016, Geely launched Lynk & Co in Berlin, a new global car brand that will be built off the same architecture as Volvo.
Importantly, said the report, Geely knew how to manufacture cars at low cost and it had turned global brand Volvo into a success story. Under Geely ownership, Volvo achieved a third straight year of record sales in 2016, with deliveries tipping 534,000 cars and SUVs.