China's Geely warns of chip shortage, but keeps annual vehicle sales target

BEIJING (Reuters) -China's Geely Automobile Holdings Ltd retained its annual sales target on Wednesday, betting that new vehicle launches will offset the short-term impact of a global chip shortage and a resurgence of the coronavirus pandemic.

The company's upbeat forecast and a strong first-half revenue growth helped send shares of the Hangzhou-based car maker up nearly 4%.

"The recent worsening of chip shortage and the resurgence of COVID-19 cases globally could pose significant threat to our sales performance over the next few months," Geely said.

"(But) the upcoming launch of more new and competitive vehicle models should enable the Group to perform better in the second half," the company said, maintaining its full-year sales target of 1.53 million vehicles.

It said total annual vehicle sales under Geely, Lynk & Co, which is a joint venture with Volvo Car, and electric vehicle (EV) brands Zeekr and Geometry would hit 3.65 million units by 2025. More than 30% of them would be electrified vehicles.

Geely posted a 22% rise in six-month revenue to end-June of 45 billion yuan ($6.94 billion), driven by an improved product mix.

Its total vehicle sales rose 19% to 630,237 cars, underperforming a 27% growth in China's overall passenger vehicle sales.

More than 90% of Geely's vehicles are sold in China and the company has been pushing to increase exports in recent years, focusing mainly on Southeast Asia and Europe.

But net profit grew just 4% to 2.38 billion yuan due to share-based payments of 641 million yuan.

Its parent Zhejiang Geely Holding Group, which has stakes in Daimler AG and Volvo Cars, created Zeekr to consolidate its resources and better challenge in the highly competitive EV market.

Geely said it would seek external funding for Zeekr and would introduce more electric models in its overall lineup.

The company, which abandoned a merger plan with Volvo Cars earlier this year, said the two firms would combine their powertrain operations and also jointly develop next generation EV architecture and autonomous driving solution. ($1 = 6.4824 Chinese yuan renminbi)

(Reporting by Yilei Sun and Brenda Goh; Editing by Krishna Chandra Eluri and Edwina Gibbs)