Geely Auto’s first-half profit grew merely 1% amid sluggish economy, intensified market competition

 

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China’s Geely Automobile Holdings reported a flat net profit for the first half of the year on Tuesday amid a sluggish economic recovery and severe price competition at home.

Revenue grew by 26% year over year in the first half to 73.18 billion yuan, but net profit only edged up by 1% to 1.57 billion yuan.

The group’s gross profit margin was still impacted by the transformation to the new energy vehicle and the intensified competition in the auto market,” Geely said.

Geely is promoting three major brands, namely Geely, Lynk & Co and Zeekr, which serve the mass, medium-to-high and premium markets, respectively.

During the first half, Geely sold 694,045 vehicles, a 13.1% jump from a year earlier. But Lynk & Co posted a loss of 660 million yuan, which reduced the total profit margin. The segment made 200 million yuan in profit a year ago.

“The loss was partly attributable to the shift to electric vehicles from internal combustion engines, and vehicle prices were tagged competitively between 160,000 yuan and 200,000 yuan,” said Gui Shengyue, chief executive of Geely.

Though Geely claimed it was not involved in a cutthroat price war initiated by EV maker Tesla, the group was hurt by the intense competition as rivals used various promotions to gain market share.

“The price war is definitely going to carry on in the second half of the year and the next,” said An Conghui, an executive of parent Zhejiang Geely Holding Group and CEO of the Zeekr brand operation.

The group’s domestic unit sales grew by 8.8% year-on-year, below China’s overall 9.8% sales increase. But Geely found breathing space abroad, as its exports jumped 38.3% and raised the group’s portion of sales outside China to 17.5%.

Its premium Zeekr brand is expected to be the vanguard in opening new overseas markets. An said the company plans to introduce at least two new Zeekr models focused on “the developed European markets.”

After the company’s entry into Sweden and the Netherlands this year, An vowed to reach four more developed European markets next year and possibly two more in 2025.