As domestic market cools, automakers look overseas
Tag: domestic market, domestic market cools
Summary: Last week Geely signed an agreement with Egyptian company GB Auto to assemble cars using parts shipped from China.
Domestic carmaker Zhejiang Geely Holding Group will begin assembling cars in Egypt in the third quarter of this year for sale locally and in nearby markets across Africa and the Middle East.
Last week Geely signed an agreement with Egyptian company GB Auto to assemble cars using parts shipped from China.
Initial capacity at the Egyptian plant will be 30,000 units a year, the company said, with the Emgrand EC 7 to be the first model built.
A top-class sub-brand of Geely's lineup, the Emgrand is designed to improve the carmaker's image, which is associated with cheap cars in the minds of many consumers.
The company said more models will be assembled in Egypt, but it is still considering plans for its product lineup.
With a market share of about 28 percent in 2010, GB Auto is the biggest auto assembler and distributor in Egypt.
It also has sales branches in Iraq, Jordan, Syria and Algeria.
Before local assembly starts in July, GB Auto will first import some Panda and Emgrand cars to Egypt starting in the second quarter.
Leading auto exporter Chery was the first Chinese carmaker to have a factory in Egypt when it began assembling cars there in 2005.
Domestic carmakers JAC Motor and BYD also export to Egypt.
Geely's exports last year totaled 38,000 vehicles, up 76 percent over 2010.
The company said it projects a 50 percent increase in overseas sales this year to about 57,000 units.
The carmaker's overseas push is designed to help offset slowing demand in its home market.
Geely sold about 430,000 vehicles last year.
Its target this year is to deliver 460,000. More than half of the additional cars are expected to come through sales overseas.
But the carmaker's ambitions are not limited to emerging markets.
It plans to begin sales in the United Kingdom as a stepping stone to Europe, a mature market Chinese carmakers have yet to enter partly due to strict safety standards.
Geely spokesman Yang Xueliang said the company will begin shipment of its Emgrand EC7 sedan and EC7-RV SUV to the UK in September or October.
The EC7 received four stars in NCAP crash tests last year, the highest rating ever for a Chinese car.
Its initial goal is to sell about 3,000 cars a year in the UK. The company anticipates adding one model a year to the export lineup, he said.
Some observers note the EU debt crisis and sluggish demand might make it a bad time for Geely's entry into the European market, but Yang noted the carmaker's affordable, quality cars could offer good value for money, an advantage during challenging times.
Its lowest-priced cars will sell at 10,000 pounds ($15,700) in the UK, he said.