Geely’s Commercial Vehicle Arm Signs Up Idle China Plant

Published on: April 15, 2021
Author: Amy Liu

The commercial vehicle unit of Geely Holding Group has struck a deal to rent an unused plant in the eastern Chinese city of Huzhou. It is the sixth production base Zhejiang Geely New Energy Commercial Vehicle Group has gained access to through leasing or acquisition since its inception five years ago.

The unit plans to “scale up the business and make it focus on new energy and smart tech,” its president, Fan Xianjun, told Yicai Global. To that end, it will make use of Geely’s existing technology and management resources and will “restructure the business to achieve a synergy effect.”

Geely NECV will lease Huzhou Enchi Automotive’s plant and set up workshops for commercial vehicle painting, testing and modification. The assembly line is currently idle, as Enchi Automotive secured a permit to make commercial vehicles in 2017, but failed to start mass production.

There are idle assembly lines across China, a source at a commercial vehicle maker told Yicai Global. “Local governments are all actively seeking investors to safeguard employment,” the person said, amid ongoing efforts to tackle overcapacity and eliminate ‘zombie’ companies.

China’s commercial vehicle market has been buoyed by recent strong demand. Last year, it bucked an overall decline in the auto sector to make 5.23 million units and sell 5.13 million, an annual gain of 20 percent and 18.7 percent, respectively, according to data from the China Association of Automobile Manufacturers.

In the first quarter of this year, output jumped almost 77 percent to 1.39 million units from a year earlier, and sales rose 77.3 percent to 1.4 million.

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