Geely seals a US$1.5billion contract in Russia

HONG KONG: Fast-growing Chinese vehicle maker Geely Automobile Holdings has signed a contract to try to sell up to US$1.5bil worth of cars in Russia over five years, but said yesterday the deal will contribute significantly to profit only starting 2010. 

The homegrown company, which recently re-designed its logo to shake off its image as a purveyor of low-priced cars, signed a new sales agreement with the Rolf Group of Moscow this month. 

Geely and its new-found Russian partner have agreed to try to sell an average 30,000 cars in Russia per year starting November 2007, which executive director Lawrence Ang said would not present huge problems given that Chinese carmakers had been selling within the country for years. 

“Our overseas sales will grow very fast next year, when our Indonesian and Ukrainian plants start large-scale production,” Ang said in a telephone interview yesterday. “We will ship the cars from China to Russia at the beginning and then rely on domestic production after we sign a formal contract on an assembly plant there.” 

Geely is one of China's few privately run motor vehicle companies – and one of its most ambitious – with no foreign partners locally. 

Selling some of China's cheapest cars under the Geely and Maple brands, the company is planning to double capacity next year and set up assembly plants in North America and Europe, as it looks to expand beyond a fiercely competitive home market. 

Ang would not give an overseas sales target for next year, although Geely has said it hoped to sell 190,000 vehicles in 2007.  

Geely plans to double overseas sales to 20,000 cars this year, from about 10,000 in 2006. 

But the company, which said it sold thousands of cars in Russia this year, takes a cautious approach to expanding overseas, and expects sales in Russia to pick up only gradually. 

Geely is in talks with Automobiles and Motors of Ural to set up a completely-knocked-down (CKD) or full-assembly plant in Russia with initial annual capacity of 30,000 units. – Reuters