Geely aims to sell one million Proton cars in 10 years
Chinese automaker bent on making Proton No. 1 again
HANGZHOU: China’s Zhejiang Geely Holding Group, which has a 49.9% stake in Proton Holdings Bhd, has raised its 10-year projection for the sale of Proton cars by over 100% to one million units.
According to its original 10-year master plan drafted in late 2017, a total of 400,000 cars would be produced in 2027 to retake Proton’s leadership position in Malaysia and become the third largest auto company in Asean.
This latest forecast on Proton’s future was disclosed by Victor Young, vice-president of public relations of Geely group, when he spoke to StarBizWeek and five other writers in Hangzhou after receiving a Malaysian convoy of Proton X70 drivers from Kuala Lumpur.
In a 45-minute media interview at Geely’s headquarters in Hangzhou, Young says:
“With Geely’s technology and products, we aim to make Proton the number one car in Malaysia – in brand and volume.
“In 10 years, we want to make Proton another Geely. Proton can sell one million vehicles in 10 years. But it is a challenging and exciting journey. We all need to work hard.”
Geely sees potential in Asean’s vibrant market. Although the population in the 10-nation bloc is over 600 million people, only about 3.3 million cars are sold in the region.
Young says: “We are very confident of Proton in Malaysia. We started thinking of Malaysia and Asean markets ten years ago.
“But we were not ready then. Now, the time has come for us to bring our technology and products to Malaysia.”
After several years of on-off and off-on negotiations with DRB-Hicom Bhd that also involved getting a nod from Prime Minister Tun Dr Mahathir Mohamad, Geely finally acquired a 49.9% stake in the national car in mid-2017.
Geely became the first Chinese auto firm to go global after it took over loss-making Volvo Cars in 2010 and turned it around. It has since made other high profile European and US acquisitions.
Last year, the group sold 2.15 million cars globally (including 1.5 million in China).
It posted a net profit of 12.55 billion yuan (RM7.53bil) in 2018, up from 2017’s 10.63 billion yuan. Total revenue was 106.60 billion yuan (RM63.96bil), up from 92.76 billion yuan in 2017.
Optimism for the loss-making Proton has risen after its first SUV vehicle Proton X70 was launched in December. This SUV and other new and upgraded models are set to boost revenue for Proton this year.
In an interview with The Star earlier this month, Proton’s CEO Dr Li Chunrong said his team was working towards achieving profits this year, after vigorously revamping the management, improving quality and cutting costs.
Dr Li declared at the March 4 interview: “We are working hard to turn around Proton, at the earliest this year. It must see profits in 2020.”
Dr Li’s personal target is to sell 90,000 cars this year, up 39% from 64,744 last year.
In Geely’s state-of-the-art showroom in Hangzhou, writers were shown a smaller SUV vehicle that may enter the Malaysian market later this year. Its price tag is 80,000 yuan.
For sedan cars, Geely is introducing a sporty look to its existing models and Proton cars.
Young says: “Our sedan cars are looking sporty. You will see our new sedan design, language and connectivity technology on the car in Shanghai Auto Show. For Malaysia, we want to be the number one - best in class in all diversified range of products, and safe too.”
Recipe for success
On the success recipe of Geely, which is being applied on Proton, Young says the group has adhered to three “fundamental” principles.
The Fortune-500 company, founded by legendary farmer-turned-entrepreneur Li Shufu three decades ago, has adopted a market-oriented approach in doing business, investing heavily in technology and sells cars at 30% lower than other similar range products.
Young says: “Geely follows the rules of the market. Our products must exceed consumer demands and expectations.
“We stick to the ‘high value for money’ principle and our car prices are 30% lower than similar models, design and quality of competitors.”
This explains why the prices of Proton cars will be lower than other similar range cars.
In technology, Geely channels about 10% of its total revenue (or about 10 billion yuan) to research and development, compared to 3%-5% allocated by other global manufacturers.
Currently, the Chinese group hires 15,000 engineers to work on technology and new products, according to Young.
Looking into the future, Young says Geely has to be quick in improvement and innovation as the auto sector is facing a lot of challenges. One example is seen in electrification.
“In China, we have strong competition from new players and IT players. We are turning Geely into a technology company too with the advent of electric and autonomous cars.
“In future, we will rely more on online technology in creating value to cars,” says Young.
“In meeting consumer demands, what comes out of China will take leadership in other parts of the world.
“And in Geely, we need to introduce benchmark models. Geely will be the market leader in electric car,” he adds.
Geely has invested in “PMA” and worked closely with Volvo and other car companies to jointly develop an open electric model named “PMA” - a pure electric module for everybody to use.
In China, the other plus factor for Geely is that the government is encouraging the development of electric cars. One of the incentives is giving subsidies to car buyers.
“In electric cars, Geely wants to be a leader in technology, products and business models.
The Chinese consumers are into intelligent vehicles. The government is pushing for this sector. In the next 10 years, China will take the lead in auto industry.”
Young says Geely has a longer ambition to be a “dominant player” in China and a “leading global player” in 10 years’ time.
This will take place against the backdrop that some foreign players, which are slow in responding to consumer demands, are losing their Chinese market share to local players.
According to Young, Geely group’s current market share in China is 6.3% (or 1.5 mil cars). It hopes to sell 3 million cars in five years and raise its market share to 15%.
Flying car and Lotus
In response to questions, Young says Geely is carrying out a pilot project to develop flying cars.
“Flying car is an experiment. It will not be a volume product.
“We work on delivery to the US only. In the long run, this will cover other parts of the world.”
On UK-based Lotus Cars, Young says Geely wants to make Lotus sports car into a product that resembles a “fast, fun and green” vehicle to meet modern consumer tastes.
Geely acquired a controlling stake in Lotus from DRB-Hicom in mid-2017, the same time it bought over Proton stake.
“Lotus will enjoy synergy and economy of scale. We respect the distinctive value in the brand.
“Lotus is strong in technology, engineering and heritage. Our Chinese consumers like that. But we need the economy of scale and meeting consumer demands.”
Geely sold only 1,630 Norfolk-made Lotuses globally in 2018.
According to a recent speculative report by Reuters, Geely is preparing to manufacture Lotus cars in Wuhan, China.
After acquiring Lotus, Geely has set up a design studio in UK to make Lotus “more beautiful”, says Young.
It has also set up an R&D centre in Germany to work on the electrification of Lotus and a state-of-the-art centre in China.
“Sales and service centres in China are starting to sell Lotus. We are selling current brand in China and US, and will develop more brands in future.”