Despite an industry-wide slowdown in sales, Lawrence Ang, executive director of independent Chinese carmaker Geely Automobile Holdings, told CHINA ECONOMIC REVIEW about his positive feelings for 2009.
Q: What do you expect in terms of industry-wide sales in 2009?
A: People are predicting 10-15% growth this year and I think that’s too pessimistic. We saw a reasonable volume in the second half of 2008 compared to the first half – it’s just through year-on-year comparisons that you get negative growth and the base for comparison [i.e. the second half of 2007] was very high. For the same reason, the first half of 2009 will be difficult, but I think we will see growth in the second half.
Q: Why was the auto sector one of the first to see a slowdown in activity?
A: Auto sales started to slow down as early as April. The major reason for this was a cyclical downturn, although the economic conditions have made things worse. Autos are consumer durables and demand always slows down after a few years of rapid growth.
Q: Do you expect to see faster consolidation in the sector?
A: If the US government really stuck to its principles, didn’t save its domestic auto companies and let the market consolidate, then I think China might follow suit. The Chinese government could force consolidation by taking support away from state-owned enterprises.
Q: So there has been an increase in state support?
A: You have started to see more government involvement this year. Chery is getting a US$1.45 billion loan from China Export-Import Bank but its performance has been shameful, with sales dropping by more than 10%. It should be punished, not rewarded.
Q: Has Geely’s strategy changed in response to the slowdown?
A: Some people argue that we should benefit because we sell cheaper cars, but people are not switching to cheaper cars. For now they have stopped buying and are waiting. We are still expanding our product range to cover small and mid-size cars. The best way to survive is not to focus on one profitable model. The economic situation will slow down our new product launches. Rather than launch seven models a year we will launch four or five.