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One brand strategy to return to Geely

 

Geely Automobile Holdings Ltd, whose parent owns Volvo Cars, said on Tuesday that it will go back to a single-brand strategy, meaning that all of its sub-brands - including Emgrand, Gleagle and Englon - may vanish from the market.

Chairman Li Shufu said that "there will be one and only one Geely" in the future.

"At the same time, we will further reinforce and integrate our distribution networks, with higher requirements for the dealerships, to enhance the competitiveness of our products," said Li, who's also a member of the Chinese People's Political Consultative Conference.

He spoke on the sidelines of the ongoing annual two sessions.

Experts said that after the three brands fade into the company's history, China's private vehicle producer is likely to adopt a new logo for the only remaining brand (Geely), which will cut costs, especially for brand management and marketing.

To meet its annual sales target of 2 million vehicles by 2015, Geely promoted a multi-brand strategy in 2009 under which it launched three new marques - the Emgrand, Gleagle and Englon - to target different groups of consumers.

With an eye-catching exterior, the Gleagle targets young consumers, while the Emgrand is more tailored for middle-class people.

The Englon is for those drivers who value tradition.

But the market feedback hasn't been what the carmaker expected. It turns out that consumers have hardly noticed the differentiation strategy and where they have, the reaction hasn't been positive for sales.

The reasoning behind the "one Geely" goal is that many of the cars resemble one another, and the competition among different lines is actually confusing consumers, industry experts said.

At the same time, these experts expressed concern about dealers withdrawing from the Geely distribution network because of uncertainty over the integration.

A dealer exodus also occurred after competitor Chery Automobile Co Ltd announced its single-brand integration plan in 2012.

Lou Tao, director of the auto marketing channel department at consultancy Sinotrust, said that integration is often accompanied by instability.

The impact of Geely's single-brand strategy remains unknown, but it has quickened its pace of overseas expansion and drawn up more plans for alternative-fuel vehicle development.

Geely, which paid $1.5 billion for the ailing Swedish carmaker Volvo Car Corp in 2010, recently announced its acquisition of British electric startup company Emerald Automotive.

 

 

 
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