Net income declined 27% to 4.2 billion yuan ($614 million) in the three months ended March 31, compared with 5.7 billion yuan the previous year, the Hong Kong-listed arm of billionaire Li Shufu’s auto empire said in a statement Wednesday. That fell short of the 4.5 billion yuan average of analyst estimates compiled by Bloomberg. Revenue increased 15% to 83.8 billion yuan.
The profit decline follows that of its biggest rival BYD Co., which on Tuesday posted a 55% drop in first-quarter profit to the lowest level in more than three years.
Nonetheless, both Geely’s and BYD’s shares rose in Hong Kong trading on Wednesday as investors bet the poor first-quarter results would mark the trough for China auto earnings. Geely climbed as much as 4.9% while BYD gained 4.7%.
Global electric car sales have surged since the start of the Iran war, which sent fuel prices higher, prompting drivers to make the switch to an EV.
Geely’s overall first-quarter vehicle sales of 709,358 slightly edged out BYD’s of 700,463, though BYD regained the lead in March.
Ahead of the Beijing auto show, Geely launched a new hybrid technology it says can beat Toyota Motor Corp. and other Japanese manufacturers as it looks to compete more internationally. At home, it is offering its 8X luxury sport utility vehicle with a package of incentives worth 27,000 yuan as China’s auto market remains stuck in the grips of a fierce price war that has eroded margins.
With soft demand and intense competition at home, Geely is ramping up exports and overseas production. It has lifted its international sales target to 750,000 vehicles this month from an initial goal of 640,000 and has forged partnerships with global automakers, including a tie-up with Renault SA in Brazil to make Geely-branded vehicles for the South American market.
