Geely Automobile Holdings Ltd. saw its profit drop to miss expectations in the first half, as China’s COVID lockdowns hindered the carmaker’s production and supply chain.
Geely revealed on Thursday that its net income fell 35% to CN¥1.55 billion ($228 billion) during the January-June period from a net profit of CN¥2.38 billion in the same period in 2021.
On the other hand, revenue was up 29% to CN¥58.18 billion due to better product pricing and product mix, making up for the 9% slump in vehicle sales in the first half. The drop in sales came as the Hangzhou-based automaker faced pandemic restrictions and global semiconductor shortages.
China’s auto industry has been weakened by the government’s COVID-related measures, with areas, including Shanghai’s commercial hub, under strict lockdowns of different degrees.
In an effort to shore up demand, the central government in June cut the purchase tax by 50% to 5% for vehicles under CN¥300,000 ($45,000) and with engine displacements within two liters.
What Could Be In Store for Geely
In the six months ended June 30, Geely experienced strong competition in its home market and higher prices in raw materials and batteries. Those challenges may continue to affect its profit- and sales-making through the end of this year.
Still, government stimulus and releases of more advanced new energy vehicles (NEVs) could help drive the overall performance of China’s highest-profile automaker globally.
Geely’s NEV sales, including pure electric and plug-in hybrids, almost made a fourfold surge in the first half, with one out of five vehicles sold being electric cars.
Geely stated that it aims to raise its 2022 sales by 24% to 1.65 million units. By 2025, the company expects annual vehicle sales, including electric vehicle (EV) brands Zeekr and Geometry Auto, to reach 3.65 million units, with the EVs representing 30% of those sales.
Geely has also exported one-fifth of its vehicles to further its reach in Southeast Asia and Europe at a time when it is seeing a decline in domestic sales.
