Geely To Build Sport Sedan

Li Shufu, the billionaire founder of Geely Automobile Holdings, is preparing to make a sport sedan as Chinese carmakers challenge BMW and Mercedes-Benz for local premium-car sales.

Geely will display a concept sport sedan at the Shanghai auto show starting this week, developed by a team led by former Volvo Cars design chief Peter Horbury. The segment is dominated by models like the BMW 3-series and Mercedes-Benz CLS. Chinese automakers are trying to produce more upscale cars to match the rising aspirations of consumers, after successfully dominating the fast-growing sport-utility vehicle market with cheaper alternatives. For Li, who got his start making refrigerator parts and motorcycles, producing sports sedans is a way to shed Geely’s image as a maker of utilitarian cars like the Panda subcompact.

“We need to keep moving, we need to keep updating and changing our product range,” Horbury said in an interview in Shanghai last week. “Geely is taking design and engineering seriously. What was ’good enough’ in China is no longer good enough, the Chinese market is maturing so fast.” If built, the Geely sport sedan will be the company’s first sport offering since it stopped producing a coupe known as “Beauty Leopard” in 2009. The two-door model was billed as China’s first sports car when it made its debut, but failed to gain popularity and sold fewer than 4,000 vehicles a year at its peak.

The design for the prototype drew inspiration partly from Shanghai’s skyscrapers and a famous bridge on the scenic West Lake in Geely’s hometown of Hangzhou. Geely is targeting its concept sport sedan at consumers in their late 20s and early 30s living in major Chinese cities, though the company also has plans to sell the model outside of China, Horbury said. He joined Geely after Li bought Volvo from Ford in 2010. Chinese-branded SUV sales more than doubled in the first quarter to overtake foreign nameplates in the segment this year, accounting for 56% of all deliveries, according to data from the China Association of Automobile Manufacturers. By flooding the market with comparable models at lower prices, Chinese automakers accounted for eight of the 10 bestselling SUVs in the first quarter, crowding out models like Toyota’s RAV4 and Honda’s CR-V. It won’t be as easy for Chinese automakers to go upscale, said Song Yang, an analyst at Barclays Plc. “If you want to buy a sports sedan, why would you buy a Geely?” said Song, who has an equivalent of a hold rating on Geely’s stock. “It could be a distraction, actually, from the models with volumes that they should pay more attention to.”

-Alexandra Ho in Shanghai