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Automobile Industry: The Case of Geely Motors

Automobile Industry: The Case of Geely Motors. Liesl Martin & Royce Kuzwayo. Contents. CHINESE AUTOMOBILE INDUSTRY GEELY AUTOMOBILE HOLDINGS LTD VOLVO ACQUISITION COMPETITORS, SUPPLIERS, CUSTOMERS KEY SUCCESS FACTORS CONCLUSION. Chinese Automobile Industry.

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Automobile Industry: The Case of Geely Motors

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  1. Automobile Industry: The Case of Geely Motors Liesl Martin & Royce Kuzwayo

  2. Contents • CHINESE AUTOMOBILE INDUSTRY • GEELY AUTOMOBILE HOLDINGS LTD • VOLVO ACQUISITION • COMPETITORS, SUPPLIERS, CUSTOMERS • KEY SUCCESS FACTORS • CONCLUSION

  3. Chinese Automobile Industry

  4. Automobile Production Statistics Source: OICA

  5. World Economic Outlook: Shift in Global Output • Structure of the world economy is undergoing a tectonic shift. Source: World Bank, 2010.

  6. Political Economy Issues: Growth Competitiveness Ranking • Losing competitiveness due to structural and political factors and the strength of the currency

  7. Contents • CHINESE AUTOMOBILE INDUSTRY • GEELY AUTOMOBILE HOLDINGS LTD • VOLVO ACQUISITION • COMPETITORS, SUPPLIERS, CUSTOMERS • KEY SUCCESS FACTORS • CONCLUSION

  8. Geely Automobile Holdings Ltd • Hong Kong investment holding company, operations Hong Kong & China • Manufactures automobiles and automobile components through subsidiaries • 12,282 Employees • Research, Production, Marketing & Sales • Brands: Free Cruiser, Geely Kingkong, Vision, Geely Panda • Produce under five key brand groups: Geely, Maple, Gleagle, Emgrand & Englon • 6 Assembly manufacturing plants in China • Revenues Dec ‘09 CNY14,069.2 mill ($2,062.7 mill)  3 times 2008 • Operating profit CNY1,252 mill ($183.6 mill) 2009  8 times 2008 • Net profit CNY1,182.7 million ($173.4 mill) 2009  34.5% increase (Datamonitor, 2010)

  9. Contents • CHINESE AUTOMOBILE INDUSTRY • GEELY AUTOMOBILE HOLDINGS LTD • VOLVO ACQUISITION • COMPETITORS, SUPPLIERS, CUSTOMERS • KEY SUCCESS FACTORS • CONCLUSION

  10. Volvo Acquisition • Biggest overseas acquisition by a Chinese automaker • 100% ownership of Volvo and related assets, including agreements on intellectual property rights, supply and R&D arrangements • Planned production 300 000 Volvo’s annually • Double original Volvo production capacity • Mainstream European brand vs domestic economy car brand • Building a successful partnership between Volvo and Geely will require a solid plan for post-acquisition integration

  11. Geely / Volvo Life-Cycle

  12. Competitive Strategy

  13. Contents • CHINESE AUTOMOBILE INDUSTRY • GEELY AUTOMOBILE HOLDINGS LTD • VOLVO ACQUISITION • COMPETITORS, SUPPLIERS, CUSTOMERS • KEY SUCCESS FACTORS • CONCLUSION

  14. Geely Competitors & Suppliers Competitors Suppliers • Main: • China Motor Corporation • Dragon Hill Wuling Automobile • Holdings Limited • Brilliance China Automotive • Holdings Limited • Zhejiang Geely Automobile • Parts & Components Company • Limited • Shanghai Maple Engine • Company Limited • IAC Group (Interiors) • Autoliv Inc (Airbags) (Datamonitor, 2010) (Geely Annual Report, 2009)

  15. Geely Customers • Customer base is diversified and fragmented • All customer transactions below 10% of the Group’s revenue • 2009 sales from the largest and 5th largest customers respectively between 8% & 2% • Distributor networks: 45 countries  5 continents  • 500 retail distributors  600 service stations  300 dealers Beijing 2010: Geely Alternative Power Insect Vehicle (Datamonitor, 2010)

  16. Contents • CHINESE AUTOMOBILE INDUSTRY • GEELY AUTOMOBILE HOLDINGS LTD • VOLVO ACQUISITION • COMPETITORS, SUPPLIERS, CUSTOMERS • KEY SUCCESS FACTORS • CONCLUSION

  17. Key Success Factors • Good relationships with Government • Expansion strategy • Adaptability • Gap analysis • Similarities • Differences • Geely was the only automobile company in 2009 awarded • “The State Technology Achievement Class 2 Award” • by Government for achievements in technological innovations • (Geely Annual Report, 2009)

  18. Contents • CHINESE AUTOMOBILE INDUSTRY • GEELY AUTOMOBILE HOLDINGS LTD • VOLVO ACQUISITION • COMPETITORS, SUPPLIERS, CUSTOMERS • KEY SUCCESS FACTORS • CONCLUSION

  19. GDP: History of low growth volatility, 1994-2009 (Standard Deviation)

  20. Conclusion • The initial “Strategic Transformation”, new technologies and product launches strengthens the Group’s competitiveness positioning the company for further expansion. • Important that they stay focused on their core business and not expand too fast too soon.

  21. Thank You Questions?

  22. References • Geely Annual Report. 2009. Geely Automobile Holdings Limited. http://hmdatalink.com/PDF/C00530/e00175(116).pdf • Geely holdings limited http://www.marketlineinfo.com.ez.sun.ac.za/library/DisplayContent.aspx?R=DFE4AE0A-B587-4C04-8C21-2840BA1B6944&N=4294546488 • OICA http://www.oica.net/category/production-statistics/ • PingQing, L., HuaJie, S & Qiang, G. 2008. The Global Value Chain And China Automotive Industry Upgrading Strategy. Management Science and Engineering. 2(1), 11-19. • Qin, F. & Huchen, X. 2006. The Management Strategy in GEELY Automobile Marching towards International Standard. College of Business and Administration Zhejiang University of Technology, P. R. China. 738-743.

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