Britain’s Lotus car to be made in Geely’s new plant in China

Geely is aiming to emulate luxury carmakers whose SUVs have so far done well in the Chinese market. But given that China’s auto-market has shrunk for the first time in two decades as well as low sales in 2018, Geely’s bid to go high-end to gain market share is a bit of a gamble.

Advertisements and government documents show, the Chinese owner of British sports car Lotus, plans to start producing it in China for the first time. To this end, the Zhejiang Geely Holding Group aims to sink in $1.3 billion (9 billion yuan) for a car factory in Wuhan city.

The development is the first move to shake up the British brand since Geely’s purchase of a majority stake in 2017.

The move is in line with Geely’s ambitions to build more up-market cars and throw off its reputation as a copycat designer and a maker of shoddy cars. For Lotus, the development means greater production numbers and newer models, including SUVs.

“For Geely, going high-end can help it take more market share,” said Alan Kang, Shanghai based analyst at LMC Automotive. “Geely needs to do that to better compete with global brands.”

Until now, Lotus cars have been built in Norfolk, England.

In a joint statement, Geely and Lotus stated, although Norfolk was Lotus’s manufacturing base, one of the key aspects to reviving the Lotus brand is to expand its manufacturing footprint globally.

“Details on additional locations and models will be confirmed in due course,” said Lotus.

As per a document posted on the website of the planning authority of Hubei province, whose capital is Wuhan, Geely’s plant will be able to produce 150,000 cars annually.

Significantly, documents did no specify when the plant would begin operations. However, they do mention that the plant is approved for building all-electric battery cars, electric hybrids as well as combustion engine cars like Lotuses.

According to job advertisements on Geely’s website, the Chinese carmaker is looking to fill at least 20 Wuhan-based roles for the Lotus project.

In 2018, Geely sold only 1,630 Lotus cars globally.

As per a source, Geely is aiming to emulate premium carmakers, including Porsche, whose luxury SUVs are selling well in China.

According to data from consultancy firm J.D. Power, the share of luxury SUVs in China’s overall passenger car market grew from 4.07% in 2014 to 5.01% in 2018. However, with the Chinese auto market contracting for the first time in more than two decades in 2018, Geely has forecast flat sales for 2019.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Strategy

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