Geely will have a major turn-around in 2015

Despite the"chilling winter" confronted by China's home-grown automakers in 2014, Geely Holding Group has persisted in its transforming path. When Sun Xiaodong, joined Geely over a year ago, he initiated a campaign to adjust the brand strategy and optimize distribution channels. Now, Sun Xiaodong, who has been promoted to the Vice President of Geely Holding Group and General Manager of its sales company, said that the hard times will pass, and now Geely is entering a new stage of enhancing dealers' capabilities which will allow for a long term development of the Geely Auto brand.

To improve sales at this critical turning point, Geely plans to once again produce a high volume sales product, Geely gave a high-profile launch for its New Emgrand. President An Conghui of Geely Holding Group noted, that it is a core product to inherit the past and usher in the future. With the New Emgrand as a start, Geely will release a series of brand-new products in the next few years to enhance its technology, performance and brand by leaps and bounds, and to forge a new image for the new Geely. Sun also claimed that New Emgrand's monthly sales will exceed 20,000 units.

Can Geely Auto achieve its wishes? Before setting off again, what preparation has Geely made? Here is an interview conducted by Shanghai Securities News(SSN) with Sun Xiaodong (Sun).

SSN: Given the current domestic and international contexts, it seems that recent years are not a good time for Geely's "revolution". On one hand, Chinese self-owned auto brands are faced with a "chilling winter". In the first half of 2014, Chinese indigenous automakers have seen their sales decreased for six consecutive months, with a year-on-year drop of 13.2%. On the other hand, Geely do not have competitive new products, which means that it is difficult for Geely to achieve their sales performance.

Sun: It's indeed risky to conduct such a transformation when the overall situation is not ideal. We're not afraid of drops in sales since fluctuation happens a lot in the market. Compared to those carried out under favorable market circumstances, transformations at a low ebb are more thorough. I believe that the hard times are transitory.

In the first half of this year, with a dramatic drop in the sales, the performance of Chinese auto brands was worse than last year. However, according to the terminal data, Geely's sales were only about 11% lower than that of the same period last year, which is not so severe compared with other Chinese auto brands. Besides, Geely's sales witnessed year-on-year growth in June, in terms of both retail sales and wholesale sales.

SSN: The competitive New Emgrand was finally launched in July. As part of the brand strategy for Geely, it's the first Geely model to show the new logo which is based on a muscular stomach. It's learned that the monthly sales of the mew model have exceeded 20,000 units. Could you please explain why it is so popular?

Sun: Over the past five years, Geely has not launched a promotion campaign for Emgrand, neither as a brand or as a product. While with profound historic accumulation and superior advantages, the New Emgrand has drawn high attention in the market.

As the first Chinese family sedan in China, the Emgrand series has witnessed sales of over 600,000 units in the past five years, ranking the 11th place among the 121 models in the same market segment. Its performance is also better than a number of joint-venture brands.

Geely's confidence in the New Emgrand comes from its three major advantages: the adoption of European top safety standards, turbo assisted engine and information technology. Firstly, it is the first model that was recognized by European safety certification authorities from Chinese indigenous brands. The car adopt san ECE standard in its safety design, and its basic model achieved four star E-NCAP safety standards as early as October 2011. Its performance has kept pace with the major joint-venture brands. Secondly, a new 1.3 turbo assisted engine with better performance is adopted by the face lift model. The engine produces 98kW of power and 185Nm of torque which can propel the compact family sedan to a top speed of 195km/h. The car is equipped with an economical engine that can drive for 860km on a single tank of gasoline. Thirdly, two sets of IT systems are adopted to meet the demands of the young consumers, these systems include G-link mobile phone interactive system and the other is a more advanced G-Netlink intelligent system that allows passengers to turn the car into a mobile Wi-Fi hotspot.

Many Geely dealers are seeing improved sales, which has also been a boost for the sales of the Emgrand and facilitates the fulfillment of its targets.

SSN: it is rare for the Chinese automakers to set models from international brands as a sales benchmark, while the New Emgrand has previously challenged the performance of international brands on a number of occasions previously how can the New Emgrand regain its sales crown?.

Sun: In terms of the technology involved, we have been defining the Emgrand as a quality middle-sized car in line with European standards. In terms of product competiveness, the performance of the Emgrand has caught up that of the foreign mainstream brands.

SSN:In the last two years, Geely has undergone a series of channel integrations. It is said that Geely is mulling to slashing the number of dealers in its network. Reforms are usually unwelcome when sales are at a low ebb. How about the integration process now?

Sun: the channel integration is a very painful process. The problems faced by different dealers vary and range from investment concepts and team management to capital flow. The first phase of integration has on the whole been completed. And the target for the second phase is to continuously enhance the overall competence of dealers. We expect to forge a second-to-none dealer system and network across the country as soon as possible.

The previous sales network consisted of over 1000 dealers, but the mean annual sales for every dealer were less than 500 units. The adjustment has pulled the dealers in some regions through. For example, Geely's sales in Jinan, Shandong province have surpassed that of Great Wall Motors and Changan Auto and topped the self-owned brands.

The sales in Southern Jiangsu province have also seen recovery. Sales in this region slumped by 70% to 80% year-on-year during the channel integration process in January, but bounced back immediately after the integration. The sales zoomed by around 50% year on year in June. Dealers in Kunshan, Jiangsu province used to be in low spirits, with mere 10 to 20 monthly sales. After the adjustment, the sales have gone up to 45 units to 50 units. The four dealers in Wuxi, Jiangsu province, to give another example, have been integrated into two, and the adjustment has also brought them with a sales rise.