| SHANGHAI, March 7
SHANGHAI, March 7 China's Geely Automobile
Holdings Ltd, whose parent company owns Swedish
carmaker Volvo, will consolidate brands and sales network to cut
costs amid sluggish sales, the company's spokesman said on
Geely, controlled by founder Li Shufu, currently sells cars
in China under three brands - Emgrand, Gleagle and Englon - but
the company's new generation of vehicles will only carry the
"GEELY" logo, spokesman Victor Yang said.
"When we launched the three sub-brands back in 2009, we were
expecting rapid sales growth. But as sales are slowing, we want
to concentrate our R&D and marketing resources to strengthen one
GEELY brand," Yang said in a telephone interview.
The Hangzhou-based firm is in the process of consolidating
its 900-plus dealer shops, which currently have exclusive rights
to sell one of the three sub-brands, he added.
"We do not have an exact target number for dealers, but we
will recruit competitive dealers and tide out the incapable
ones," Yang said, adding consolidating its network has been
going on, but the new brand strategy will speed up the process.
China's automobile market, the world's biggest, is
rebounding with about 10 percent growth expected this year, but
indigenous brands are losing market share amid competition from
foreign rivals such as Ford Motor Co, Volkswagen AG
and General Motors Co.
Chery Automobile Co and BYD Co Ltd
have taken similar restructuring measures to focus their
resources on fewer brands or sales channels that would help them
save money in developing, manufacturing and marketing cars.
Geely has set a growth target of 6 percent this year by
sales volume, a sharp slowdown from last year's 14 percent pace.
Its wholesale sales volume fell 47 percent in January from a
year ago, which the company said was partly due to the ongoing
restructuring of its sales network. Retail sales still hit a
record that month, Yang said.
Geely shares have shed more than a quarter of their value so
far this year, far trailing the benchmark Hang Seng Index
, which has slid 3 percent.
In 2009, Geely launched what was intended as a "medium to
high-end" brand of cars in China called Emgrand targeting
business people. Shortly afterwards it created the Englon and
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,
Gleagle was meant to be Geely's entry brand, while Englon
straddled somewhere between Emgrand and Gleagle.
The approach may have worked for global automakers like
General Motors Co and Toyota Motor Corp.
"But for most of those indigenous Chinese automakers it was
still premature," said Yale Zhang, head of Shanghai-based
consulting firm Automotive Foresight. "The fundamental
competitiveness of cars by those companies was not good enough
to make sense of the multiple-brand approach."
Geely's Emgrand, Gleagle and Englon-branded cars will still
be sold over the next few years, but will be gradually phased
out after new generations of cars are rolled out under the
"GEELY" logo, Yang said, adding that the GEELY-branded flagship
model will likely be launched early next year.
(Editing by Kazunori Takada and Himani Sarkar)