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(Bloomberg) – Geely Automobile Holdings Ltd., the Chinese car manufacturer controlled through Volvo Cars owner Li Shufu, reported a 43% drop in first-half profits after the coronavirus outbreak closed the factories and decimated demand.
The net source of revenue in the June six months was 2.3 billion yuan ($331 million), the automaker said on a Monday. Revenues fell 23% after automatic deliveries fell. The company reduced its annual sales target to 1.32 million cars from 1.41 million cars.
The pandemic has kept consumers away from showrooms and forced automakers to suspend production, exacerbating an industry crash that lasted more than two years. As the epidemic in China recedes, sales have begun to rebound in recent months and automakers are in the world’s largest market to help them grow back.
China’s recovery accelerates as July’s sales accelerate
Geely said the headwinds are expected to persist, making “2020 the most challenging year in the group’s history.” He also warned that “the intense festival in China’s market could get even worse.”
Geely’s inventories fell by 2.9% in the afternoon in Hong Kong. Inventory has added about 7% this year.
While profits are under pressure, Geely is one of the few major automakers to be successful during the crisis, joining Toyota Motor Corp. and Tesla Inc. To restrict spending, Geely reduced his workforce by about 12% in the first part to 38,000.
In February, Geely’s parent company announced plans to merge Geely Auto with Volvo Cars, a move that could pave the way for the creation of the world’s largest automaker. The agreement would unify most of the strong car brands of billionaire Li and create a company with annual sales of more than $40 billion.
Geely was discussing the structures for Volvo’s agreement with the consultants, and no final resolution had been taken on the details, adding time and size, other people close to the matter said in March.
Li, who is also Daimler AG’s largest shareholder, defended consolidation as a way for automakers to un garr resources for projects such as self-driving cars and electrification. He has built a global automotive empire for more than two decades, securing stakes in classic European brands such as Lotus and investing in Malaysian automotive company Proton.
(Updates with portions in the fifth paragraph, relief to the sixth).
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