[HONG KONG] Billionaire Li Shufu is shaking up his sprawling Geely auto empire, lining up a new chief executive weeks after a shock move to take its US-listed premium electric car brand Zeekr private.
Andy An, Zeekr’s CEO, will also head parent Zhejiang Geely Holding Group after the subsidiary’s privatisation by Geely Automobile Holdings is complete, said current CEO Daniel Li on an earnings call on Thursday (May 15).
Zeekr’s privatisation at a valuation of US$6.4 billion was announced earlier this month just a year after it started trading in New York and was seen as an escalation of Li’s drive to streamline his business empire.
The group, which also includes stakes in Volvo Car, iconic UK sportscar brand Lotus, and the maker of London’s ubiquitous black taxis, is coming under pressure from intense competition in China’s car market.
“Why this fast? Time waits for no one. Given the conditions of China’s auto market, for Geely Auto, there is no room for error in the market,” Gui Shengyue, a senior executive with Geely Auto, said during the call on Thursday. “So we must quickly resolve problems and through a merger, quickly lift the competitiveness of our company.”
Daniel Li will become executive vice chairman of Geely Holding Group after the merger and will play an important role in the group’s capital operations and collaborations, Li said.
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The leadership reshuffle was announced shortly after Geely Auto reported net income that more than tripled to 5.67 billion yuan (S$1 billion) in the three months ended Mar 31, from 1.56 billion yuan a year earlier.
That was broadly in line with guidance the company provided last month following a change in its accounting policy. Revenue rose 25 per cent to 72.5 billion yuan.
Separately, Zeekr on Thursday reported a first-quarter net loss of 718 million yuan, narrowing 64 per cent from last year. Total revenue was largely flat, increasing just 1.1 per cent to 22 billion yuan.
Zeekr merged with the Lynk & Co connected car brand earlier this year, and the period was the first quarter with the full integration of the two marques, Zeekr CEO Andy An said.
“The two brands’ initial technological consolidation has already boosted profitability through optimised R&D and shared platforms,” An said.
Geely recorded net current liabilities of 11.3 billion yuan, but said that after a comprehensive assessment, this has no significant impact on its ability to continue, because the business continues to generate stable cash flows, has good relationships with financial institutions and is carrying out plans to improve liquidity, it said.
Geely continues to enjoy strong growth in China, with deliveries rising 48 per cent in the first three months of this year. Popular models such as the electric Xingyuan hatchback and Xingyue L sport utility vehicle are among the best-selling vehicles in the world’s largest auto market.
But like other Chinese automakers, Geely is facing stiff trade headwinds. The European Union’s tariffs on Chinese electric vehicles and the increase in taxes on car imports and weak consumer sentiment in Russia – where Geely is a top seller, are impacting exports. Overseas deliveries grew just small 2 per cent in the first quarter, compared with a 66 per cent surge in a year earlier, according to a separate company filing in April. BLOOMBERG
