Geely reveals Aussie launch plans

A LEADING West Australian businessman who played a pivotal role in the introduction of Hyundai to Australia in 1986 is set to pioneer another new brand Down Under – China’s Geely Automobile – by launching a 1.5-litre small car in early 2010.

John Hughes – one of Perth’s biggest multi-franchise car dealers and former director of original Hyundai importer Bond Motor Sales – expects his first shipment of 500 Geely cars to arrive in Australia in January for February sales launch, initially confined to WA.

And Geely – pronounced ‘Jee-lee’ – might be just the first Chinese car brand to be imported by Mr Hughes’ Chinese Automotive Distributors, which has not ruled out adding others to the franchise.

These brands will go head-to-head in Australia with other fledgling Chinese marques, including the just-introduced Great Wall Motors and forthcoming Chery, both of which are being imported by Sydney-based Ateco Automotive.

Coincidentally, Ateco managing director Ric Hull once worked for Alan Bond’s Bond Motor Hyundai import operation after being appointed general manager by Mr Hughes.

From top: John Hughes, Geely MK, Geely Panda, Geely GE.

Geely will open for business in Australia with the Corolla-sized Geely MK sedan and five-door hatch, powered by a 1.5-litre petrol engine mated with a choice of four-speed automatic or five-speed manual transmissions.

Mr Hughes said it was too early to give pricing, except to say the MK would be price-competitive with Korean small cars “but will have more features”.

The MK is expected to be followed in the next year or so by a 1.0-litre four-seat city car, the Panda, which is sold in two and four-door variants in China.

The Panda may well rival Suzuki’s Indian-built Alto and forthcoming Hyundai i10 and Proton Saga-based sedan as Australia’s cheapest car.

The cartoonish styling of the Panda (or LC-1) was reportedly inspired by the 2008 Beijing Olympic Games panda mascot, and was unveiled at last year’s Shanghai motor show.

Mr Hughes said his operation was not planning to push upmarket with other Geely models, including the freshly-launched 1.8-litre EC7, which is to be sold in China under a new premium sub-brand, Emgrand, and exported to the UK from next year.

This also rules out the controversial Rolls-Royce lookalike, the Geely GE, revealed in concept form at this year’s Shanghai motor show.

Initially, Geely cars will be available only through a network of three WA dealerships – two in Perth and one in regional Mandurah.

Fremantle-born Mr Hughes’ own John Hughes Group will own one of the dealerships, in a new stand-alone facility at Victoria Park, near his huge multi-franchise complex just south of Perth’s CBD where he sells about 1400 cars a month from his Hyundai, Mitsubishi, Ford, VW and Kia outlets.

He said he had dealers in mind for Perth’s northern suburbs and Mandurah, but said it was too early to disclose names.

Mr Hughes – who was the world’s top-selling Hyundai dealer for eight consecutive years in the 1990s and remains Australia’s biggest Hyundai dealer – told GoAuto that his company was going through the process of recruiting dealerships in the eastern states.

He said that while final numbers had not been decided, he expected five or six dealers to be appointed to each of Sydney and Melbourne, with a lesser number in Brisbane, Adelaide and regional centres.

“I am not going to over-dealerise,” he said. “I have been a dealer all of my life and I have been on the other side of the fence and I have seen the result of over-dealerisation.

“Yet I also understand that we have to get sufficient representation to get the coverage.”

Mr Hughes said he was targetting substantial dealers who were both well established and prepared to take a long-term view of the product.

“I am quite aware what happened when the first Japanese cars came out I know what happened very well when the Korean cars came out,” he said.

“When we started with Hyundai, (fellow Bond Motor director) Danny Fisher and I went over to the east to find dealers and nobody really wanted to know us – ‘Hyundai? South Korea? What are you talking about?’“I am absolutely convinced that the Chinese products are streets ahead, relatively, of what the Japanese and Korean cars were when they first came out.

“But people are going to ask: ‘Chinese car, what’s the quality like, what’s the resale value like’. So we understand we are facing a period of growth.”

Mr Hughes said he was planning to open for business on the eastern seaboard in the second half of next year.

He said Geely’s Chinese management had been keen for him to begin sales this year.

“But with the car import tariff going down from 10 per cent to five per cent on January 1, it made more sense to start in early 2010,” he said.

“In November, I will be signing an irrevocable order for 1000 cars, 500 of which will be coming in the first shipment.”

Mr Hughes said official Australian Design Rule paperwork for the Geely MK had been submitted to Canberra and certification approval was expected within 30 days.

He said he was also expecting two Geely MK sample cars – one manual and one automatic – to arrive next month from China for local testing.

Mr Hughes said he had spoken with several Chinese manufacturers before opting to hitch his wagon to Geely, which he described as “family”.

“I have been involved in a lot of things over the years, not necessarily all involved in the car business, and when I look at those that went belly up, I think I was in partnership with the wrong person,” he said.

“But here, firstly, I am very impressed with the people. The Chinese take a different approach to the Koreans or Japanese, where they are less concerned about the written word and are more concerned with a meeting of the heart and the minds.

“And I am not being naïve about that. I have been around too long in this industry for that.”

Mr Hughes declined to state an annual target volume for Geely, saying he would start with the initial order of 1000 and take it from there.

“I have seen too many wise men make projections and then fall flat on their bum, and I don’t intend to do that,” he said.

“What do they say? A successful launch is where you under-promise and over achieve.”

Asked by GoAuto if the name of his import company – Chinese Automotive Distributors – indicated that he was looking to import more than one Chinese brand, Mr Hughes was coy, saying: “Why not be as widely embracing as possible? Who knows, in future? Initially, it is exclusively Geely.”

He declined to be drawn on what other brands he might consider.

At least four Chinese brands are now already in start-up phase for Australian distribution. Apart from Mr Hughes’ Geely Automobile and Ateco’s Great Wall and Chery, Lifan is has been signed up by China Motor Franchise (Australia).

Lifan’s 520 small car has already received ADR certification for Australian sale, but as GoAuto has reported previously, Lifan sales plans have been shelved until currency problems can be solved.

In China, there are at least 10 other companies making cars, many of them in joint-ventures with foreign car-makers. These include Shanghai Automobile Industry Corporation, Beijing Automotive, Dongfeng Motor Corporation, First Automobile Works, Guangzhou Automobile Industry Group and Taijin Automotive Industry.

Brilliance China Auto, BYD Auto and Changfeng Automobile are among others to have risen from state-owned operations.

The Chinese government is encouraging these companies to merge, arguing that it would be better served by about four large motor manufacturers on a global scale.

Privately-owned Geely was founded in 1986 – the same year that Mr Hughes, Mr Fisher and one-time tycoon Alan Bond started importing Hyundais.

Geely originally made refrigerators, but then advanced to motorcycle parts, then motorcycles and finally cars in 1998.

The rapidly expanding Geely started exporting in 2003, but its attempts to enter the US market hit a snag when cars reportedly failed US crash test requirements.

Geely exported about 30,000 cars to South and Latin America, Middle East, Africa and eastern Europe in 2007.

It has spread its manufacturing operations overseas with factories in Russia, the Ukraine and Indonesia, and has announced plans to build a new factory in Mexico to build a mid-sized car for North America.

Despite this, Mr Hughes says all Geely cars for Australia will be built in China for the foreseeable future.

Geely hopes to lift its overseas sales to 1.3 million units by 2015.

The Geely sales venture with Mr Hughes is the company’s second automotive investment in Australia. In March, Geely acquired the troubled Australian transmission maker Drivetrain Systems International (DSI) after Korean owner SsangYong fell into financial troubles.

Mr Hughes said the DSI link with Geely would have no direct connection with Chinese Automotive Distributors, but underlined Geely’s commitment to Australia and the Australian motor industry.