Recently, Geely released sales data for 2021. According to the data, Geely achieved total sales of 1.328 million vehicles in 2021, an increase of 1% over the same period in 2020, but there is still a big gap compared with geely's target of 1.53 million vehicles set at the beginning of the year. In addition to not meeting expectations in terms of sales, Geely Automobile was listed by S&P as a company with greater debt pressure as early as 2020, so is Geely really under great pressure as foreign media say?
First, let's take a look at the recognition given to Geely by the internationally renowned rating giant S&P. In recent years, under the influence of industrial policies and market trends, many vehicle manufacturers have invested a lot of money in the field of new energy and intelligent vehicles. Geely, SAIC, FAW, BAIC and BYD have invested an average of more than 15 billion yuan in the past three years, and Geely has reached an average annual expenditure of 40 billion yuan. S&P found that due to Geely's huge investment in new technologies and mergers and acquisitions, there is a certain scale risk in its finances, so it listed Geely's bond rating as a negative observation, and the rating remained at BBB-.
It should be known that the highest rating of bonds is AAA, and Geely's BBB-rating basically indicates that there is a certain financial risk. S&P is not simply for Geely, S&P has changed the rating of 20 mainstream car companies around the world, of which 5 have been directly downgraded, including multinational car companies such as Nissan Motor and Tata Motors. In this regard, Geely is clearly not targeted by US capital.
In fact, Geely Automobile has suffered repeated setbacks since 2021. In June 2021, Geely Automobile withdrew its listing application materials on the Sci-Tech Innovation Board of the Shanghai Stock Exchange and terminated the listing process on the Sci-Tech Innovation Board. Previously, Geely had planned to conduct an IPO on the Science and Technology Innovation Board, planning to issue no more than 1.732 billion shares and plan to raise 20 billion yuan, which would also greatly reduce the pressure on Geely's financial expenses, but it backfired, and Geely did not achieve its wishes.
In terms of revenue, Geely achieved revenue of 92.114 billion yuan in 2020, a decrease of 5.43% from 97.401 billion yuan in 2019. In the first half of 2021, Geely achieved revenue of 45.032 billion yuan, although the revenue increased year-on-year, but the net profit was almost in place, maintained at 2.381 billion yuan.
For now, S&P's statement that Geely's financial is not optimistic is not a malicious attack, especially Geely's new smart high-end electric brand in 2021 - Extreme Krypton. Extreme Kr is still unprofitable and is expected to have a continued adverse impact on the Group's finances.
Of course, S&P is only concerned about Geely's financial situation, which is still very stable compared to brands such as Nissan. As early as 2019, some people suspected that geely invested Daimler shares had the risk of blowing up, and Geely could not repay the original equity acquisition of more than 9 billion US dollars, but in hindsight it was obviously unfounded. At present, Geely is more diversified than in 2019, and Geely's performance in domestic and overseas markets is eye-catching, which can be described as achieving the international and domestic double cycle of group sales.
For financial risks, Geely has long been familiar with it. During the financial crisis, the merger and acquisition of Volvo, which was abandoned by Ford Motor, was originally a local private enterprise with no name, and now who can think of relying on the resurrection of Volvo Cars, Geely not only has an amazing penetration rate in the low-end market, but also has become a model for independent car companies to learn in the high-end market.
Looking to the future, overseas media may still have a lot of criticism of Geely, believing that Geely's business strategy is too aggressive. Indeed, compared with Great Wall Motors and Changan Automobile, which focus on car manufacturing, Geely's diversification strategy and frequent mergers and acquisitions are indeed slightly urgent, but this is Geely's genes, and it is also the last skill that makes Geely leap into a 100 billion giant. For the questioning of foreign media, we need to have a clear understanding of our own and have more confidence in national brands.