Geely tries again in South Africa

Financial Mail - After 40 years in the motor industry, during which he has earned a reputation as one of its most innovative and accomplished marketers, John Jessup faces his biggest challenge yet — to turn Geely into a desirable SA car brand.

Jessup is CEO of Geely SA, created last year to import and market the Chinese brand. His challenge is twofold: Geely must not only overcome traditional doubts about Chinese vehicle quality, but also persuade SA consumers it won't abandon them a second time. Hundreds of owners were left in the lurch three years ago after the previous importer closed down.

The new company is a joint venture between the Hallmark motor group, a sister company of JSE-listed Cargo, and the family-owned Magic Group, involved in motor retail and building supplies. Hallmark is also a partner in another Chinese import joint venture, for Great Wall Motors .

Geely, China's biggest independent motor manufacturer, which last year bought Sweden's Volvo, has no direct interest in Geely SA but has seconded full-time staff to the venture.

Jessup has spent most of his career at BMW SA and Nissan SA, where, combined, he worked for over 30 years. Despite being a prime mover of many of their branding and marketing strategies, he generally worked behind the scenes. His new job gives him the opportunity to put his own ideas into practice.

He has no illusions about the challenge. It is generally accepted that, like the Japanese and Koreans , Chinese motor companies will eventually match the quality of the rest of the market. For now, though, they have a reputation for being cheap and not much else. Perceptions of after-sales service and the availability of spare parts aren't much better.

It is not an undeserved reputation. When Chinese brands started targeting SA in 2007, some were awful. As Jessup says , Geely was not the only one to disappear with its tail between its legs when the SA new-car market collapsed in 2008.

He says Chinese companies are desperate to overturn these stereotypes. Quality is improving rapidly . "You can sometimes see the difference from one import shipment to the next. If you identify an issue, they fix it there and then."

It remains to be seen whether such an ad hoc approach to quality improvement will impress SA consumers. But few would deny Chinese design and build quality are getting better.

When Geely SA was reborn last year, Jessup inherited 12 dealers. There are now 30 and he hopes for another five or six this year. Many operate used-car businesses from the same premises. A number also sell new vehicles from the Indian Mahindra company. Several are owned by groups with other dealerships selling Asian, European and American brands.

On the issue of after-sales service, Jessup says all dealers have dedicated workshop facilities. Research suggests spare-parts prices are competitive and the company has R6,5m of stock in its Midrand parts warehouse.

Geely dealerships are often shabby compared with those of established brands but Jessup says that will change. "I've told my dealers that once we are all nicely profitable, we will revamp premises." The same goes for Geely SA. "I have only the people I need. The priority is to get structures in place and run the business properly from an overheads point of view. Once we're on firm financial ground we will look at expansion."

Geely SA sells a single car range, the MK, in sedan or hatchback. A small, entry-level car will arrive soon, and then an executive sedan. Recent monthly sales have topped 100. Jessup believes 1000 is a realistic target within five years. His company also has marketing rights in neighbouring countries. Namibia and Botswana are likely to be first .

"Our job is to persuade the SA buyer that we are not just about price but about the whole value equation," says Jessup. "I know there will be scepticism but Geely will get it right. This time we are here for good."