MotorTorque expert: Geely and its prospects
Geely revealed that it will enter the UK market towards the end of 2012, following a path well worn by Asian manufacturers keen to infiltrate lucrative Western markets.
Geely's a huge company and one that owns Volvo but it's a relative unknown in the UK so it will be intriguing to see how it will fare in the West.
Will it do a Hyundai and settle in for the long term or dip in and out like Daihatsu?
Asian manufacturers are keen to get to Western Europe and the UK because profit margins are so much better.
Average new car prices here sit perennially between £25,000 and £30,000 depending on which way the market is sloping and on a good or bad day, the average UK motorist will spend more on a new car than the average Chinese motorist.
That’s why manufacturers scramble to get over here and probably one of the major reasons behind Geely’s relatively cheap takeover of Volvo – a well established and respected name in the European motor industry and one that’s at the front of the pack when it comes to technology and safety.
That purchase means Geely, despite spending more than £1bn, has probably saved itself money that it would have spent on developing its own technology, R&D and cars to meet European levels of build quality and demand.
European customers buy cars that are suited to the European market place however even within that umbrella community; there are factions and differences between national markets.
You needn’t look past Seat and Skoda when they first arrived in the UK to see that they weren’t suited to that particular market, despite their home markets and headquarters being a damn sight nearer than Geely’s.
That’s why manufacturers are faced with a decision of adapting its cars to suit where they are being sold, or pack up and head home to where they’re more accustomed to.
To adapt successfully, takes time and while Geely has an advantage in the sense that it will benefit from Volvo’s experience, technology and reputation in Europe, it will still have to play the long game before it establishes itself in the UK - and even then it’s not guaranteed.
A major hurdle it faces is desirability. Without the Volvo link, it’s a relative unknown in the UK and buyers will be sceptical at first.
Geely has outlined that it will target the lower end of the market initially with hatchbacks and saloons priced from £10,000, markedly cheaper than its rivals, but with such a thing as a used car market, UK motorists need to want the car as well.
The market is full of sheep and motorists only tend to desire a car after they’ve seen it on the road and to see it, a manufacturer needs to shift units.
It’s a catch-22 situation but if Geely can build a car that’s tailored to the European market, good looking, cheap and drives well then desirability should follow. Unfortunately, for the majority of manufacturers that doesn’t happen immediately and instead comes about after many years of tinkering, tweaking and modifying models to suit the UK market place.
I’m sure Volkswagen, Audi, Alfa Romeo, Skoda, Seat, Hyundai, Kia et al can vouch for this.
Fortunately, the fact that we Brits pay more than most for our cars means the money, time and energy spent by manufacturers trying to make a success of the UK market, is well worth it.