Consumer Cyclicals

Geely to Invest USD1.9bn in the Revival of Lotus

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Geely is considering an investment of no less than USD1.9bn in the British car manufacturer Lotus, according to Bloomberg citing people familiar with the source on August 9. Geely plans to expand Lotus’s Hethel plant in the first phase and later to set up a second factory, as well as a new design innovation center in the UK. The Chinese automaker is also considering increasing its holdings in Lotus, which are currently at 51%. It is now in talks with its Malaysia's partner Etika Automotive Sdn Bhd. that owns the remaining 49% shares.

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Geely signed an agreement with Malaysian investment company DRB-HICOM (DRB) [DRB:MK] in 2017 to acquire 49.9% shares of DRB’s subsidiary Proton. As part of the transaction, Geely gained a controlling stake of Lotus under Proton. Through the acquisition of Lotus, Geely’s chairman Li Shufu hopes to expand into the Southeast market and enrich the company’s product line. Although Lotus’s sales volume has declined a lot and has been in financial trouble since its founder Colin Chapman passed away in 1982, Geely expects to rebuild Lotus as a luxury car brand that could compete with Porsche [PAH3:GR] and Ferrari [RACE:US].

Xinyue Shao