Geely Warns of Auto Overcapacity, Shifts Focus to Alliances

In a bold statement at an auto forum in Chongqing over the weekend, Geely Holding Group’s Founder and Chairman, Li Shufu, made it clear that the global automotive industry is facing "serious overcapacity" - and the Chinese auto giant is hitting the brakes on new manufacturing expansions.

Rather than building more plants or ramping up production, Geely is pivoting toward smarter, more strategic growth. The company, which owns brands like Geely, Zeekr and Volvo, is opting to leverage existing facilities and forge international partnerships.

One such move includes tapping into French automaker Renault’s production base in Brazil and taking a minority stake in its Latin American operations - a deal first announced in February.

However, that collaboration has faced delays amid tighter regulatory scrutiny in China, according to a Reuters report in April. Geely, for its part, maintains that the venture is progressing well.

Li’s comments come against the backdrop of a fierce price war in China’s overcrowded auto market, prompting domestic players to aggressively pursue global expansion. Major Chinese automakers like BYD, Chery Auto, and Great Wall Motor have already begun building plants overseas.

The strategy is evident even in Malaysia. Geely is working closely with DRB-Hicom on the ambitious RM32 Billion Automotive High Tech Valley (AHTV) project in Tanjong Malim - a move that aims to transform the area into a regional hub for next-generation vehicle development, including electric and autonomous technologies.

Meanwhile, Chery Auto is making its own mark by investing RM2.2 Billion into the first phase of the 800-acre Beringin High Tech Automotive (HTA) Valley to develop its Chery Smart Auto Industrial Park. This facility when complete will further strengthen Malaysia’s role in the evolving global automotive landscape.

Chery is already producing CKD models for the Malaysian market at its own CKD facility in Shah Alam and Inokom’s assembly plant in Kulim, Kedah.

As competition intensifies and global capacity reaches its limits, automakers like Geely are betting that strategic alliances and smarter resource utilization - not just sheer scale - will be the key to surviving and thriving in the next era of mobility.

Source: Yahoo Finance