Little by little, Geely Holding Group is putting the pieces together for what is shaping up to be a new global automotive empire.
The path it took to become what it is today, however, has been rather unconventional.
The 30-year old company with less than 20 years of car making history already owns the Geely, LYNK & CO, Volvo, London Taxi, Yuancheng (commercial vehicle) brands, and recently added the Proton and Lotus brands. It has reportedly acquired a controlling stake in the 11-year old U.S. flying car startup Terrafugia. It also has the Caocao ride hailing mobility brand under its arm.
On June 28, it expanded its global innovation and R&D footprint by signing a Letter of Intent with the City of Gothenburg, Sweden to establish a new Geely European Innovation Center which will house the existing China Euro Vehicle Technology Center (CEVT), Geely Powertrain R&D Center, Geely Design Europe, LYNK & CO’s International Marketing, Sales, and Services, as well as several key suppliers to Geely and serviced apartment facilities. That comes just five days after Geely signed the final contract for the acquisition of 49.9 percent of Proton and 51 percent of Lotus from DRB-HICOM.
One Geely, nine brands and a sales target of 3 million vehicles globally for 2020, which is three times what it likely will sell this year. If realized that will propel Geely into the list of the top 10 selling automakers globally and mirror Volkswagen Group as a conglomerate with an arsenal of brands.
Unlike what many other Chinese automakers have done, which is to team up with foreign automakers and form joint ventures in order to learn and acquire technologies through the so-called “market for technology” strategy that never really worked to the benefit of the Chinese side, Geely has taken the “acquisition for market and technology” route.
Its acquisition of Volvo Cars was clearly for intellectual property which it has benefited tremendously resulting in star products such as the Emgrand sedan and Boyue SUV as well as the birth of the LYNK & CO brand. The Swedish brand has been revived, and China now has become its export hub to the U.S. market. Its acquisition of Proton gives it market access to an important geographic region and also an opportunity to “reverse” transfer technology to the Malaysian brand in need of rejuvenation in its home market and the ASEAN region. Its acquisition of Lotus gives it presence in the niche but still important sports car segment and access to technology with racing DNA. And its acquisition of Terrafugia gives it presence in a still untapped field for many of the multinational automakers.
The surprising thing is all of these deals are orchestrated by an unorthodox company Chairman – Li Shufu – once considered as an “automotive maniac.”
Geely is far from successfully becoming a global automotive powerhouse and challenges will increase as it gets bigger and expands its global footprint, but so far, its unorthodox moves have proven doubters wrong.