Geely Automobile Holdings Ltd, one of the major domestic carmakers in China, announced its six months profit dropped 20%, disrupted by a sales slump at home as major foreign brands continue to gain market share.
The company was also hit by unexpected falls in exports to its major overseas markets – Eastern Europe and the Middle East. Geely posted a net profit drop from 1.398 billion yuan in the same period of 2013 to 1.11 billion yuan ($180.6 million) for the January to June period.
“Challenges remain in the second half of 2014 in view of the rapid changes in economic and regulatory environment in China,” said chairman Li Shu Fu. “Competitive pressure on indigenous brands in the China market should continue to intensify in the coming years as most major international brands have been strengthening their presence in the China market,” he added.
The automaker also revised its full year forecast for car sales, down from 580,000 units to just 430,000 autos. In the first six months of the year the company had sales of 187,296 vehicles, a sharp 29% drop from the same period in 2013. Turnover also dipped 32% to 10.16 billion yuan. Geely’s parent company also owns Swedish-based Volvo Cars, which posted a much better result, riding on advances in Chinese demand and a steady growth in the European region.