After the establishment of CEVT, a research center jointly established by Zhejiang Geely Holding Group and Volvo Car Corp, a launch plan for the products researched and developed by the European center has been carried out in domestic market simultaneously. It is said that the production plant, with an inside name of "V Project", has already broke ground in Luqiao district of Taizhou, the hometown of Geely's Chairman Li Shufu.
With a planning capacity of 200,000 vehicles, the project will mainly focus on the development of Geely brand products based on the modular architectures and relevant components of new intermediate cars developed by CEVT. Geely's Chief Public Relations Officer Yang Xueliang confirmed to the reporter that the new plant is to produce the next generation of car models developed by CEVT.
Li Shufu's ultimate dream is to make Geely a "Volkswagen" with three sub-brands at different levels, with the highest-end Volvo being built into the Chinese Audi and competing with the world-class luxury brands like Benz and BMW and the lowest-end brands of current self-owned ones in parallel with the Skoda. According to the plan, the new generation of Geely products, which will be developed by the CEVT, will take a heavy responsibility in the building of another "Volkswagen" brand. The launch of the "V Product" means Li Shufu has put the plan into the domestication process, and also means the acceleration of Geely's globalization.
An important step to enter the European and US market
Li Shufu attended the grounding breaking ceremony of "V Project" in Taizhou last December, just three months after the establishment of CEVT. With an investment of up to 10 billion Yuan, the Luqiao base was jointly invested by the Volvo headquarters in Shanghai, the subsidiary listed on the Hong Kong Stock Exchange, and Zhejiang Geely Holding Group, according to the public information of local Development and Reform Bureau.
CEVT will develop new intermediate car modular architectures according to the market demand in the future and the modular architectures can be combined to form five to ten models to meet the needs of the second generation products of Geely and Volvo. The new base in Luqiao is planned to produce the modular platform being developed by CEVT, which is called CMA platform within the base. Although the platform can be shared by both Geely and Volvo, the "V Project" will mainly focus on the production of Geely cars developed at the platform. As these models will be much more advanced than the current Geely models, cars like Focus and Golf will become their main competitors.
According to Li Shufu's plan, Geely will enter the US market in 2016, and the products developed by CEVT will be available by the end of 2016, which will also be the second generation of Geely cars. Vice President of Geely Group and Geely International General Manager Zhang Lin said, "As the models are designed in accordance with European standards from the beginning of R&D, they can directly enter European and the US market."
After the successful acquisition of Volvo, Geely's popularity soared overseas. It grew rapidly in overseas market, with an export of more than 120,000 cars in 2013, almost seven times of the 18,000 units in 2009. Emgrand EC7 enjoys a bright performance in the export, accounting for nearly half of the total exports. Moreover, as Gleagle GX7 and other models were introduced to overseas markets since last year, Geely has successfully entered more than 30 countries in the Middle East, South America, Southeast Asia and North Africa.
However, even if Geely has the technology advantage to enter Europe and the US, it still lacks brand influence, particularly in Europe. Due to the traditional concept of consumption in Europe, it's still impossible for Geely to compete with international brands.
Capacity upgraded to pave the way for the second generation of products
After the proposition of a brand strategy, Geely began to integrate its parent brand and three product systems to form one Geely brand. With the groud breaking of "V Project", Geely has also begun to set up its production layout. There are currently seven Geely vehicle production bases in Zhejiang Province's Linhai, Ningbo and Luqiao, Shanghai, Lanzhou in Gansu Province, Xiangtan in Hunan Province, Jinan in Shandong Province, and Chengdu in Chengdu Province.
According to people familiar with the matter, more than half of Geely's production bases have come into adjustment period since last year for the second generation. "Haijing" base was moved from Shanghai to Xiangtan in Hunan Province, sharing the same production line with Gleagle Vision (Yuanjing). Meanwhile, the Linhai base will be moved to Duqiao and the Ningbo base to Chunxiao.
After the reconstruction of the four production bases, Geely is going to employ model platform instead of brand as its settling standard, changing the situation in which Gleagle, Emgrand and Englon have their individual production bases. "One base only produces models of one platform." Apart from helping improve productivity, reducing parts procurement and logistics costs, this new standard is also in accordance with international practice.
With the capacity upgraded, the production line of Geely will be adjusted according to market and the old models will be gradually replaced with new ones. Although Geely sold 549,500 cars last year, the current sales situation is not optimistic. There is still a gap between states-quo and the goal of 560,000 units.
Li Shufu on the one hand speeds up efforts for R&D, on the other hand allows Geely to slow down the pace. The board set the sales goal of 2014 at 580,000, an increase of 6% compared with 2013, which is the lowest expected growth in four years. Li Shufu said, "The current focus of Geely is not scale, but quality." Geely now is shrinking its products and, in the future, it will no longer mention its plan of more than 40 models on five platforms, but integrate into four model platforms and launch new cars successively in 2015.