On March 23, 2022, Geely Automobile officially released its 2021 annual report. Geely achieved a total sales volume of 1.328 million vehicles throughout the year and continued to be the annual sales champion in China’s domestic passenger car market for five consecutive years.
Five-year Champion in Sales
- The CMA high-end series “Chinese Star” sold 200,000 vehicles throughout the year, with the monthly sales of the Xingyue L exceeding 10,000, and an average price of 160,000 yuan.
- Lynk & Co celebrated its fifth anniversary and sold over 220,000 vehicles throughout the year, with cumulative sales exceeding 660,000. The average weighted transaction price of Lynk & Co’s products reached 165,000 yuan.
- In 2021, Geometry Auto sold 55,320 vehicles, a year-on-year increase of 145.3\%, and had a market share of 7.43\% in the A-level market.
- In terms of new energy vehicles, Geely’s sales of new energy products increased by about 47\% year-on-year in 2021. In addition to pure electric and PHEV models, Geely also launched multiple HEV models.
Geely stated that the company’s financial performance last year was lower than the management’s original expectations. Despite the shortage of automotive components and chip supplies and the increase in raw material costs, Geely maintained its leading position in brand sales, although its overall sales volume fell slightly.
Eye-catching Financial Results
Turning to the financial data, Geely’s cash flow reached a record high of RMB 20.8 billion in 2021.
- Total revenue increased by 10.3\% year-on-year to RMB 101.6 billion; after deducting the shareholder’s net income attributable to equity holders, it increased by 9.4\% to RMB 6.06 billion. The shareholder’s net income was RMB 4.85 billion and the net profit was RMB 4.35 billion.
- The enterprise rating has improved. Geely Automobile has been confirmed by S&P with a “BBB-” issuer credit rating, and the outlook has been raised to “stable”.
- The dividend payout ratio was 35.3\%, up 5.8 percentage points from 2020.
- Other income, such as technology services and licensing profits, continued to grow, with a year-on-year increase of 245.3\%. The net profit of the joint venture company, JG Finance, increased by 45\% year-on-year. Among them, Lynk & Co’s net profit increased by 37\%, and JG Finance’s net profit increased by 45\%.
It is based on these data that Geely set its sales target for 2022 at 1.65 million vehicles, including 70,000 Jikua 7s, and announced that it will continue to optimize its product structure by launching eight new models of the Emgrand Hybrid brand, including five Emgrand Super EV Hybrid models and three Emgrand Oil Hybrid models. In addition, Geely will accelerate the research and development of methanol vehicles. In 2022, Geely will launch the world’s first methanol-electric hybrid sedan, the fourth-generation Emgrand methanol-electric hybrid sedan.
Guo Shuqing, CEO of Geely Automobile Holdings, believes that the product layout of Geely’s 4.0 era will continue to enter the harvest period, and the advantages of the new CMA, SPA, SEA architectures and other new architectures that Geely has been building over the past few years will be fully reflected, which will help to increase sales and revenue of new energy vehicles and other automobiles.
Research and Development Investment Exceeds RMB 140 Billion
- R&D Investment of Holding Company: Geely Holding is the only automaker among the top 10 Chinese companies in R&D investment in 2021. It has accumulated more than RMB 140 billion in R&D investment in the past decade, with over 20,000 designers and developers and 26,000 innovative patents.
- Automotive R&D Investment: Geely Automotive invested RMB 5.5 billion in R&D in 2021, a year-on-year increase of 16.1%. The total R&D investment in the past five years amounted to RMB 25.6 billion, and the proportion of R&D investment to revenue has been increasing year by year. In 2022, Geely will continue to increase its investment in R&D of new energy products.
- Automotive R&D Goals: Geely will fully promote the implementation of the Smart Geely 2025 Strategy, increase investment in the R&D of new energy products, enhance brand value, layout in the field of intelligent electric vehicles, and continue to promote domestic and international dual circulation.
About Jikua
- Since the delivery of Jikua 001 began in October 2021, a total of 12,453 units have been delivered in four months, with an average order price of RMB 335,000. The MPV model will be launched and delivered in the fourth quarter of 2022.
- In November, Geely increased its stake in Jikua to 58%. In the next three years, Jikua will launch six new models; by 2025, Jikua’s annual sales target is 650,000 units, ranking among the top three in the global high-end electric vehicle market.On the day of the press conference, it happened to be the first anniversary of GEEK+ company and the official release date of ZEEKR OS 2.0.
The newly launched ZEEKR OS 2.0 mainly added some ZAD functions, which are safety technology functions in the GEEK+ intelligent assisted driving system, involving ACCQA, AEB, LDW, FCTA and other functions. Of course, considering the feedback from users of ZEEKR OS 1.1.1 version, optimization and improvement have been made for 59 functions.
At the press conference, GEEK+ CEO An Conghui disclosed the 2021 annual data of the GEEK+ brand:
GEEK+ was established on March 23, 2021, started brand release and accepting reservations on April 15, and began product delivery on October 23. As of February of this year, the accumulated delivery volume has reached 12,453 units, and the unit price of GEEK+ single-car has reached 3.35 million yuan. This can be said to be the fastest enterprise to reach the accumulated delivery volume of ten thousand in the high-end intelligent electric industry.
An Conghui also honestly faced the problems currently existing in GEEK+ and put forward countermeasures and GEEK+’s next step planning. The most important problems are:
- The first is product delivery. Because there is a relatively large gap between product orders and delivery, it involves factors such as chips, supply guarantee, and the epidemic situation.
- The second is that GEEK+ software still needs significant improvement.
Countermeasures and Solutions:
-
Firstly, on the user side, we have confidence in achieving the plan of delivering 70,000 units this year because GEEK+ has a good product competitive advantage, good order volume, a manufacturing foundation, and the efforts of the chip team. The future chip supply will also improve significantly.
-
Secondly, on the product side, we focus on creating explosive models and star models. In the next three years, GEEK+ will launch two car models into the market every year. This year, there will be a new GEEK+ 001 sports-oriented model, plus an MPV model launching on the market.
-
GEEK+ needs to increase the number of software talents and the proportion of software talents in research and development personnel, and increase investment in intelligentization. The GEEK+ team has more than 7,000 people, of which more than 3,800 are research and development personnel. In terms of research and development, the proportion of software-related research and development personnel has exceeded 60%.### Overseas Sales YoY Growth of 58.2\%
-
In 2021, Geely Auto sold 115,000 vehicles to overseas markets, with a YoY growth of 58.2\% and the addition of 24 new sales outlets. Over the 20 years of its expansion abroad, Geely Auto’s business footprint has covered 28 countries, with 227 overseas sales and after-sales outlets.
-
In 2021, Geely Auto’s sales in the Philippines increased almost 200\% YoY, and the Coolray (Binrui) remained the best-selling model throughout the year in both the Philippines and Kuwait’s segmented markets. The Tugella (StarRui) continued to rank first in the Saudi Coupe C-Class SUV segmented market. In Costa Rica, Geely Auto’s sales remained the best among Chinese brands.
In 2022, the company will continue to expand its export sales to new markets in Southeast Asia, the Middle East, and Western Europe. The Lynk & Co brand will deepen its presence in the European and Asia-Pacific markets, while the Geometry pure electric vehicles will enter the European and Southeast Asian markets. By 2025, Geely Auto aims to have the largest market share among Chinese brands with a sales volume of 3.65 million vehicles (including JiKe), surpassing mainstream joint venture brands.
Recently, the stock prices of the auto industry have fluctuated due to the influence of the broader market, and Geely Auto’s stock price has been affected as well. On this issue, Gui Shengyue, CEO and executive director of Geely Auto Holdings Limited, stated at the performance briefing on the same day that Geely Auto’s stock price performance is affected by many factors, such as macro environment, industry policies, and market volatility. From Geely Auto’s current valuation level, the company believes that there is still room for improvement. Gui believed that the capital market will take a more comprehensive and rational view of the auto industry. When Geely’s new energy advantages, such as hybrid, JiKe, and Geometry’s pure electric technology, are further demonstrated, it will undoubtedly bring new changes to its valuation.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.