Geely's grand revival leaves much to prove

ZEEKR Intelligent Technology Holding

13/11/2025 13:32

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, Nov 13 (Reuters Breakingviews) - Eric Li has yet to deliver on his promise. A year after the founder of China's Geely group pledged a more focused, integrated strategy for his sprawling collection of automakers, investors are still waiting to see the spoils of an overhaul at his flagship Hong Kong-listed carmaker $23 billion Geely Automobile 0175.HK.

    Li is pushing for his marques to work more closely together even though some of them, such as Volvo Cars and Lotus, sit in separately traded entities. That ought to save money on costs of development, marketing and maintaining aftersales networks.

    Yet Geely Auto's net profit margin may clock in at just 3.6% for September quarter when it reports earnings on Monday, according to forecasts compiled by Visible Alpha, lower than the 7% it managed in the full year 2024. The figure is expected to hover around 5% from 2025 to 2027, their forecasts show, slightly beneath the forecast for peers like BYD 002594.SZ and Great Wall Motor's 601633.SS.

That's disappointing. Geely Auto has streamlined its structure since September 2024, when Li articulated his overhaul plans. The company sealed a $2.4 billion deal to take private New York-traded EV subsidiary Zeekr ZK.N; that premium marque in turn took control of sister brand Lynk & Co; and mass market-focused automaker Geometry merged with its sister brand Galaxy.

Though Geely Auto has hiked its full-year sales target to 3 million vehicles from 2.7 million, carmakers continue to deploy aggressive discounts to attract buyers despite Beijing's efforts to discourage destructive competition. The average discount for electric cars, for example, stood at 6.5% in October, down from a peak earlier this year but nearly double the same period in 2024, per Citi.

Geely is valued by the market at less than 11 times estimated 2025 earnings, versus nearly 14 times forward estimates twelve months ago. That multiple is around half the level of its compatriot BYD. It also undershoots state-backed peers such as SAIC Motor 600104.SS and Chongqing Changan Automobile 000625.SZ. Li's turnaround has a long way to go.

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CONTEXT NEWS

Hong Kong-listed Geely Auto will report earnings for the September quarter on November 17.

Geely Auto’s vehicle sales for the period rose 43% year-on-year to 761,009, according to earlier filings, while its Zeekr brand saw sales fall 4% to 52,860. Sales have risen 45% in the first three quarters of the year, compared with 2024.

The Geely Group aims to promote greater focus, integration and collaboration across its businesses, per a new strategy that founder and chair Eric Li outlined in September 2024. The group includes Hong Kong-listed Geely Auto, Volvo Car, Polestar and Lotus, among others.

Geely Auto's vehicle sales are growing, despite a slowdown at Zeekr https://www.reuters.com/graphics/BRV-BRV/gkplqxganvb/chart.png

Geely Auto's price-to-earnings ratio has fallen https://www.reuters.com/graphics/BRV-BRV/egpbbmkqbpq/chart.png

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))