China's Geely to consolidate branding, sales

BEIJING, April 18 Fri Apr 18, 2014 12:26pm EDT

BEIJING, April 18 (Reuters) - Geely Automobile Holdings Ltd , whose parent company owns Swedish carmaker Volvo, announced on Friday a plan to phase out its three brands and consolidate them under the Geely name as part of a restructuring effort to shore up sales and cut costs.

Geely, controlled by Li Shufu, the Chinese billionaire who acquired Volvo in 2010 through Geely's parent company, currently sells cars in China under the Emgrand, Gleagle and Englon brands through three different sales channels.

Under the new structure, future products will be marketed under the Geely brand name, executives told a news conference on Friday ahead of the Beijing auto show, which opens on Sunday.

"The new brand strategy is our strategic response to market needs based on the realities of the company's development," said An Conghuipresident of parent Zhejiang Geely Holding Group .

"We will centralise our resources and leverage economies of scale," An said.

As part of restructuring which began last year the Hangzhou-based automaker has been streamlining its retail sales network which currently has more than 900 dealers.

The latest restructuring might result in a smaller number of dealers, executives said on Friday, though they did not provide specific details.

Some of the moves Geely announced on Friday were previously reported by Reuters and other media outlets after the company told dealers of its intention to restructure sales and marketing operations.

By overhauling the brand strategy and streamlining its dealer network, Geely is aiming to reinvigorate sales which have lost momentum since 2009 when the company adopted the multiple-brand strategy.

Geely plans to sell about 1.2 million vehicles by 2019, Sun Xiaodong, vice president of parent Geely Group, told the news conference, more than doubling from an expected 580,000 this year.

Geely sales increased by 59 percent in 2009, but its annual growth has slowed to around 15 percent in the past two years.

In 2013, Geely's sales of 549,468 were up 14 percent, the company said.

Sales volumes have fallen 37 percent during the first three months of this year, with An attributing the dismal performance to the ongoing restructuring.

Geely's situation is similar to the plight other indigenous Chinese car brands.

While China's automobile market, the world's biggest, is rebounding with about 10 percent growth expected this year, indigenous brands as a whole are losing market share amid competition from foreign rivals such as Ford Motor Co, Volkswagen AG and General Motors Co.

Chery Automobile Co Ltd and BYD Co Ltd have taken similar restructuring measures to focus their resources on a fewer number of brands or sales channels in a bid to save money in development, manufacturing and marketing.

In 2009, Geely launched what was intended as a "medium-to-high-end" brand of cars in China called Emgrand targeting more well-to-do people. Shortly afterwards it created the Englon and Gleagle brands.

At the time, domestic carmakers sought to shore up their brand image and divided their product portfolio into multiple brands of low-end "no-frills" cars and more upscale, higher-image vehicles.

Gleagle was meant to be Geely's entry brand, while Englon stood between Emgrand and Gleagle. (Editing by Lee Chyen Yee and Jason Neely)

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