AutoBeta(AutoBeta.net)08/21 Report--

Geely Motor reported first-half revenue of 47.56 billion yuan, down 11 per cent from a year earlier, while net profit attributable to equity holders was 4.01 billion yuan, down 40 per cent from the same period last year.

In 2018, Geely's performance increased, with full-year revenue of 106.595 billion yuan, up 15% from the same period last year. Thanks to an increase in overall sales and profit margins during the year, net profit rose 18% to 12.55 billion yuan.

Sales volume is an important factor in the decline in performance. In the first half of this year, Geely Group sold 651700 vehicles, down 15% from the same period last year, and achieved 43% of the group's annual sales target of 1.51 million vehicles, still ranking first among Chinese brands. However, due to lower-than-expected sales and uncertainty in the market, Geely decided to cut its full-year sales target by 10% from 1.51 million to 1.36 million.

In the announcement, Geely said the group's performance in the first half of 2019 was lower than management expectations. On the one hand, the overall decline in sales in China's auto market. Overall passenger car sales in China fell 14.0% in the first half of this year compared with the same period last year, while total passenger car sales of Chinese brands fell 21.7% year-on-year, according to the China Association of Automobile Manufacturers. On the other hand, since July 2019, some parts of China have formally implemented the national six emission standards ahead of schedule. Geely offered higher discounts and preferential measures to reduce dealer inventory in the first half of the year, thus weakening the performance of gross profit margin.

In addition, Geely's high-end road is also full of adjustments. Geely Group, which has a 50 per cent controlling stake in the Lecker brand, sold 8655 vehicles in June, of which 4533, 2029 and 2093 were sold respectively. In the same period last year, Lecker sold only one model, with sales of 9247 vehicles.

Yang Xueliang, vice president of Geely Automobile Group, said, "even if the car market is depressed, the Luck brand has not cut prices. Geely's high-end brand line will always be maintained and will not adopt the 'price for volume' response measures."

Sales volume continues to decline, profit decline is not only Geely, many independent brands even fall into the situation of operating at a loss, facing a survival crisis.

Tan Benhong, executive vice president of Changan Automobile, believes that half of all Chinese car brands will go bankrupt in the future. "China's automobile industry has entered a comprehensive phase of elimination, and the stronger the strong, the greater the pressure on the weak. The survival of the fittest is even more obvious. 50% of Chinese car brands will cease to exist for some time soon, and of course our new forces will also face greater pressure to build cars, "said Tan Benhong.

An Conghui, president of Geely Automobile Group and CEO, said: "after 50 per cent of the Chinese auto industry goes bankrupt, the remaining 50 per cent of the competition may be the fiercest."

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