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From Refrigerators to Volvo Part Four: The Geely Story – Making More Cars, Sports Cars, and Factories
From the turn of the millennium onwards Li Shu Fu started to believe that the wider global automotive industry. On January 6th 2000 Li Shu Fu did his first media tour, over 1300 people, including dealers and media, descended on Guangzhou to view Geely’s latest cars. The results were strong with Geely being remembered.
To promote Geely globally Li Shu Fu took to the promotional circuit giving talks at conferences or different events, the result was that this down to earth, somewhat country bumpkin-esque car making businessman was mocked constantly. On one particular TV show Li talked extensively about his technology, investment and branding but was quoted as saying “Making cars? Making cars is nothing special, is it not just four wheels, two sofas and an exterior shell?” the host quipped back “So this is how Geely cars are made….” The audience roared into laughter but it was like water off a ducks back to the down to earth Li, he believed that all promotion was good promotion.
2001 was a good year for Geely, Li Shu Fu was anointed by the China Entrepreneur magazine as the most ideologist person of the year, with the reasoning being that no matter what he chooses he is always determined to do it, for example making cars. Li Shu Fu’s nickname of “Crazy Car Guy” followed him wherever he went, with increased exposure – no matter if positive or negative, helped Geely’s sales go from strength to strength.
One particular day is revoured in China’s economic history, and that is November 9th 2001, the day China formally joined the World Trade Organization. At the same time good news came for Geely in the form of an announcement from the National Development and Reform Council in which Geely’s JL6360 model made it onto the list. Geely had gone from being an ‘unregistered child’ into a ‘registered citizen’. The celebrations at Geely were explosive, Li sat down with upper management, engineers, designers and line workers alike to celebrate by drinking, and rumor says they drank a lot. On December 26th of the same year, Geely’s first sedan was approved along with their original first two hatchback models, meaning Geely was now a legal automotive enterprise.
With the support of Central Government policy Geely’s development was exceptionally fast. In June 2002 Li announced a long term development plan which included ‘three projects’ of which contained the JunMa Project, Liebao Project, and XiongShi Project. The Junma project involved producing and selling 300,000 cars by 2005 with the Ningbo plant producing 100,000 and Linhai 50,000, Qiaolu 100,000 and the Shanghai factory producing 50,000 with sales income reaching 1.8 billion RMB and 100 million profit. The Liebao project set goals of 1 million sales by 2010 with Zhejiang province absorbing 500,000 units alone and sales reaching 4 billion RMB with sales income of 2.5 billion RMB. The XiongShi Project – which translates as ‘Ferocious Lion’, was to sell 2 million cars per year with 1.5 million years being absorbed by the Chinese market and the rest being exported, with an estimated income of 80 billion RMB and taking 10% of the Chinese market. As current statistics show, the plans did not meet expectations at any level but it did show that Geely had a heart to aim big.
Geely continued with its car models, bringing the Geely YouLiOu to the market, which was essentially a sedan version of the existing Meiri and helped Geely promote itself as a producer of not only hatchbacks but sedans too. Shortly afterwards, Geely launched the Geely MeiRenBao, ‘Beauty Leopard’ which was the first Chinese sports car and was designed by an Italian design house.
The Beauty Leopard had all the looks of a sports car, but lacked the engine power with it having a 1.3L and 1.5L four cylinder engine. Both engines produced 86 or 94bhp, producing 110Nm and 128Nm of torque respectively when mated to a 5 speed manual gearbox. Official 0-100km/h times were set at 12.8 seconds and 12 seconds for the 1.5L, nothing to write home about. The Beauty Leopard did have one thing for it, it was cheap at 129,999RMB to 148,888RMB.
From 2001 to 2005 Geely used the Haoqing, MeiRi and YouLiOu models to improve its fortunes and continue to invest in infrastructure with renewed investment.
The most notable factory was Geely’s Shanghai facility, which was then producing the HuaPu range of cars under the ownership of Li Shu Fu’s younger brother. As HuaPu’s fortunes ran in a different direction to Geely’s own successful road, the company failed to gain central government support and thus didn’t have the official license to produce cars – but did so anyway, like many other small auto companies in China during that period. To get around the lack of legality at Huapu Li rolled his brothers enterprise into his own, calling the new company Shanghai Maple. The factory is located into Shanghai’s suburbs of Jinshan District and is able to produce 150,000 cars per year with the models includes HaiFeng, Hai Shang, Hai Xun, Hai Yu etc – the majority of which were loosely based on clones of the popular Citroen ZX.
In 2003 Toyota was unhappy with Geely. In a case which was called ‘The Auto Industry’s First IP Protection Case’ by the Chinese media, Geely was accused of treading on Toyota’s own IP. Toyota claimed that Geely’s logo was too similar to Toyota’s own logo, and at the same time Toyota were unimpressed with Geely using ‘Toyota Powered’ as part of its advertising campaign. Geely was asked to compensate Geely 14 million RMB.
Li Shu Fu put forward his own case in court, he said the Geely logo was based on the Chinese characters ? and ? which could be loosely translated as beautiful day rather than intentionally aiming to copy Toyota’s logo. On the ‘Toyota Powered’ issue, Li claimed that he was being honest as Geely models were at that time Toyota powered with engines bought from Tianjin-Toyota who did not disagree with sales to plucky little Geely – on this point Geely won. Despite Toyota products being cloned by other Chinese manufacturers, it seems that Toyota has lost heart in the Chinese legal system and hasn’t ventured forth since.
By 2005 Geely’s JunMa Project had its first year harvest after being implemented, although Geely sold 150,000 units it was still far away from its intended 300,000 units but at the same time it had a stellar 36% growth rate which pushed Geely into the Top Ten World’s Biggest Car Makers on volume. At the same time, Geely listed its shares on the Hong Kong stock market.
Geely Freedom Vessel or ‘Zi You Jian’ was also launched in 2005. This model was developed in partnership with multiple international partners including Korea’s Daewoo and Japan’s Kyocera, for the Chinese market this update was considered impressive.
Geely’s technical prowess continued – the Zi You Jian came with three engine options: a 1.3L, 1.5L and 1.6L with the latter two being self-developed by Geely. Gearboxes came in the form of 5 speed manual and also an automatic model – again, developed by Geely in house and the first Chinese automatic gearbox.
Thanks to our coverage partners at DragStory.com and Mark Walter, we present to you the live video feed from the Snowbird Nationals event from Bradenton, Fla.
Renault has secured Chinese government approval for a joint venture with Dongfeng Motor, giving the French group its first manufacturing foothold in the world’s largest car market by units sold.
Renault has long been rumored to be in the process of setting up a joint venture with on and off savior, Dongfeng. Rumors have been persistent since 2005 but nothing concrete has been landed until the Chinese government gave the french company official approval to establish its new business in China.
Dongfeng and Renault are planning to invest 7.8 billion RMB in a dormant company, Sanjiang Renault, which was established in 1993 with Sanjiang Space Industry Group which Dongfeng later absorbed into their group. Renault established the company relatively early in the Chinese market when compared with its rivals but sales were slow, leaving Renault to eventually abandon the partnership after building the Renault Traffic Master van and also extremely limited number of Renault Espace MPV’s.
Since the abandonment of the joint venture, Renault has been importing vehicles from its Korean partnership with Samsung which has meant their Chinese market offerings have been priced slightly higher than rivals. The Sanjiang Renault JV will be officially renamed to Dongfeng Renault Automotive Company and will be based in Wuhan, the home of Dongfeng.
Dongfeng has already established a long term and highly successful joint venture with Renault’s partner, Nissan, but at the same time it also has a parntership with Renault’s rival PSA where the Citroen and Peugeot models are produced.
Read the rest on The Business Standard
In what may come as a surprise to many, India is quietly becoming a production hub of high-end vehicles meant for export to China. Iconic US motorbike maker Harley Davidson, Austrian motorcycle manufacturer KTM and Mahindra & Mahindra have preferred to set up manufacturing facilities in India than in the relatively low-cost China and export the output.
KTM, 48 per cent owned by Bajaj Auto, has identified two of its products under the Duke brand for export to China as completely knocked-down (CKD) units. The initial target is to sell over 10,000 CKD units of these high-end bikes annually. Exports are expected to commence in 2014. The two bikes are Duke 200 (Rs 1.35 lakh, ex-showroom, Delhi) and Duke 390 (Rs 1.88 lakh) manufactured at Chakan in Pune as part of the company’s joint development programme with Bajaj Auto. The KTM strategy is to sell high-power bikes from Europe and low-power ones from India. The bikes would be assembled at an outsourced facility in China.
Confirming the plans, S Ravikumar, senior vice-president (business development), Bajaj Auto, said, “The China strategy for KTM is clear. They want to target the niche upper end of the motorcycle market in China. They are not interested in the lower end where there are many players and huge volumes. We expect there to be a large market for high-end bikes in China.” The China thrust is part of the joint strategy of Bajaj-KTM to treble exports to around 70,000 units per annum from India, from about 25,000 currently. That effectively means about 13 per cent of the exports would come from selling to China.
Stefan Pierer, CEO, KTM Motorcycles AG, said, “We are in the process of setting up an assembly unit in China, which is expected to be commissioned sometime next year.” Keeping KTM company will be Harley Davidson, which has lined up for export models developed on the recently unveiled Street platform from its facility in Bawal (Haryana). Currently, Harley does not have any plants outside the US, except in Brazil and India, and it wants to leverage those plants for export to China. Anoop Prakash, managing director, Harley Davidson India, said, “Harley Davidson has developed the Street platform after a gap of 14 years. Both Street 750 and Street 500 will be manufactured in India, the only other production hub for the models apart from Kansas in the US.
These bikes will be exported from India to markets in Europe and Asia, including China.” Production and export of both models on the Street platform are expected to commence in India mid next year. Prakash, however, declined to specify a timeline for starting exports to China.
Whenever there seems to be a problem in China, the issue is blamed at the feet of foreigners. The one sided fued started by China’s state owned Central Television Service started earlier this year aimed to address the issue of high prices on imported cars, but now the issue has moved over to the price of replacement parts.
China’s state broadcaster, China Central Television (CCTV), has accused some foreign auto makers, including Land Rover, Subaru and Audi, of profiteering and called for revision of auto market regulations.
A common rear end accident costs the owner of an imported Range Rover100,000 yuan (16,313 U.S. dollars) to fix, because of expensive parts on which the manufacturer has a monopoly, while the car costs a little over 1 million yuan.
Likewise, owners of imported Subaru and Audi also have to buy parts at a high price, according to Tuesday’s CCTV program “Half-Hour Economy”.
It also takes time to get parts because they can only be ordered from foreign producers, according to the program.
Industry insiders said duties and taxes on imported car parts, usually about 29 percent, do not make a big contribution to the prices.
The program blames the 2005 guideline on car sales management for excessive prices. The regulation allows foreign car makers to set up their own franchisees to handle sales, after-sales service and the supply of spare parts, which gives them monopolies.
Volvo’s first factory in Chengdu under Chinese ownership is on the verge of producing its first model for the Chinese market, the S60L. The S60L is for all intents and purposes the same car as the European made S60 but given the addition of an extra 80mm in the wheelbase to keep rear seat Chinese passengers happy and comfortable. Another point of note is the Volvo S60L’s addition to the government procurement catalogue which will surely give the Swedish-Chinese company a solid boost in the coming months when govt depts are looking to clean out their 2013 budget.
Chinese media are reporting that the S60L will launch with six models in the coming weeks with pricing starting at just 269,999RMB and rising to 384,900RMB for the top of the line T5 model. All of the six models come up with a 2.0T engine so there is a potential for a LWB 1.6T in the near future at a lower price point.
The S60L’s pricing, if confirmed to be correct, will put it in direct competition with the BMW 3-Series and Audi A4L family both of which offer stretched models but at the 300,000RMB and rising price area.
An official launch date of December 13th has been announced, with the car being in dealerships shortly afterwards.
General Motors and its joint ventures in China saw their domestic sales increase 13.3 percent on an annual basis to a new November record of 294,500 vehicles. It was the second-best sales month of 2013.
During the first 11 months of 2013, domestic sales by GM and its joint ventures increased 11.4 percent year on year to 2,889,368 units and will reach 3 million units for the first time in the middle of December.
Shanghai GM sold 142,009 vehicles in China during November, a year-on-year increase of 4.1 percent. SAIC-GM-Wuling’s domestic sales rose 23.4 percent to 146,296 units. FAW-GM sold 6,015 vehicles in the domestic market, an increase of 24.4 percent.
Buick sold 76,085 vehicles in China during November, an increase of 8.4 percent on an annual basis. The brand was led by the original Excelle family, which experienced sales growth of 9.8 percent to 25,673 vehicles, and the Excelle XT and GT, whose sales grew 12.2 percent to 19,877 units.
Chevrolet sales in China dropped 5.3 percent year on year to 59,647 units. The brand continued to be led by the Cruze, with demand rising 12.1 percent to 24,909 units. Demand for the Malibu was up 20.3 percent to an all-time monthly high of 9,257 units.
Cadillac sales in China increased 92.5 percent on an annual basis in November to 6,277 units. The SRX and XTS had all-time monthly sales of 2,783 units and 2,561 units.
Wuling sales in China during November totaled 135,830 units, a year-on-year increase of 25.4 percent. It was led by the Hong Guang family, which had sales of 60,168 units – an increase of 143.1 percent from last November. Baojun sales were up 2.3 percent from last November to 10,466 units.
During the first 11 months of 2013, Shanghai GM’s domestic sales grew 13.5 percent to 1,386,092 units, SAIC-GM-Wuling’s domestic sales grew 9.7 percent to 1,446,767 units, and FAW-GM’s domestic sales increased 4.3 percent to 52,489 units. In addition, Buick sales rose 16.4 percent year on year to 752,161 units, Chevrolet sales were up 3.1 percent to 591,214 units, Cadillac sales increased 57.8 percent to 42,717 units, Wuling sales were up 11.7 percent to 1,359,108 units, and Baojun sales grew 16.3 percent to 87,659 units.
With one runner-up in the Summit Tournament of Champions already in his career, Austin Cowan was determined that this time would be different.
Cowan finished runner-up in the 2011 version of IHRA’s championship tournament in Top Dragster and with another shot at a world championship at stake, Cowan buckled down and prepared for one of the biggest rides of his life.