According to China Automotive Review, Geely will need to raise around RMB30bn ($US3.75bn) in the next 10 years to fulfil its aggressive expansion and acquisition plans – capital the company does not have.
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Geely, China’s largest private carmarker is planning to sell two million cars a year by 2015.
Specific expansion projects include:
· A joint project with the Hong Kong Productivity Council to jointly develop a new car there, and produce components. A memorandum of understanding was signed in June 2005 for an investment of more than abn yuan.
· A new RMB2 bn yuan plant in Lanzhou set up as a joint venture with Lanzhou municipal government. Geely would own 42.5% of the venture and Lanzhou 57.5%.
· Another RMB2bn yuan plant in Xiangtan, Hunan.
· A RMB10bn plant in Jinan Shandong.
· A RMB18.8bn collection of facilities in Cixi, Hangzhou Bay, Zhejiang, the home province of Geely owner Li Shufu. Dubbed Geely Motown, it would consist of several plants making car bodies, transmissions, engines and other parts, as well as a R&D facility, die plant and a training centre.
In addition Geely is committed to investing over RMB5bn in expanding its existing facilities, namely:
· RMB1bn in Shanghai Maple Automobile
· RMB4.9bn in Taizhou Automobile Industry City
· RMB1bn in Sanya Insitute in Hainan Province and
· RMB2bn for the Luobidong touist facility in Sanya, Hainan.
China Automotive Review said that Li has financed most of Geely’s investments to date using his own personal fortune and expensive bank loans. Last year it issued shares in Hong Kong through Citi Group, raising $HK742m ($US95m). The group made around RMB250m profit in 2005.
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By GlobalDataSo are Geely’s plans realistic? The publication is undecided, but one source quoted said that Geely must create media hype to be taken seriously. As long as it makes progress and continues to grow (it sold 63,000 cars in the first four months of the year, up over 56% on a year earlier), it should be all right.
