GEELY Automobile Holdings, the Hong Kong-listed arm of billionaire Li Shufu’s auto empire, posted earnings that beat estimates and reiterated an outlook for further sales growth this year despite a slowing Chinese car market.

Net income rose 1 per cent to 5.3 billion yuan (S$1 billion) in 2023, the company said on Wednesday (Mar 20), beating analyst estimates of 4.9 billion yuan. Revenue climbed 21 per cent to 179.2 billion yuan, also topping expectations. Its board recommended a dividend of 22 Hong Kong cents per share.

“The group not only achieved a record high in total sales volume, but also set a record in the sales volume of new energy vehicles” and export sales, it said. That was despite the “fierce competition”  it faced as price wars raged throughout the year, it said.

Geely reiterated a sales goal of 1.9 million vehicles for 2024, up about 13 per cent from a year earlier. The company is continuing to launch new models to try to catch up to market leader BYD, the world’s largest producer of electric vehicles (EVs) and China’s number one selling auto brand last year.

But headwinds are building in the world’s largest auto market as an economic slowdown weighs on consumer spending. That is underpinned a fierce price war, initially kicked off by Tesla discounts in 2022 and which has grown to include BYD and Geely.

The competition is pushing out smaller players, including Human Horizons’ premium brand HiPhi, WM Motors and the EV unit of embattled real estate developer China Evergrande Group. At the same time, established manufacturers are investing more into research and development on drivetrains, advanced assisted driver systems and other in-car technologies. While that is aimed at boosting sales, it is also eating into the bottom line. Geely’s R&D expenses increased by 15 per cent in 2023.

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Geely’s transition towards EVs is showing positive early results, with battery-powered vehicles including plug-in hybrids now making up almost 30 per cent of its sales. The mass-market Galaxy series sold more than 83,000 units within the first year of its launch, and deliveries of the premium Zeekr brand rose by 65 per cent on new models and upgrades. Zeekr is exploring going public in the US, marking the first Chinese EV maker to do so since Xpeng’s IPO in 2020.

Geely’s domestic performance is all the more important as geopolitical headwinds and slowing demand globally hurt the outlook for exports. The EU is investigating Chinese EV makers over generous government subsidies that have underpinned the industry’s rapid expansion, including inspections at Geely, BYD and SAIC Motor. BLOOMBERG