China’s Geely Auto signs gearbox joint venture with Japan’s Aisin

Chinese automaker Geely Auto Holding Group Limited said that it has signed an agreement with Aisin AW to establish a new joint venture with a subsidiary, Geely Luo You Engine Company Limited, to produce six-speed gearboxes and parts. The initial plan is to produce 400,000 units per year by 2020.

Aisin will own 60% of the joint venture company, with the Japanese firm contributing USD 70.2 million of the USD 117 million registered capital, while Geely Luo You will own 40% and invest USD 46.8 million. Established in 1969, Aisin is the world’s largest producer of automotive gearboxes.

With the launch of Geely’s two core strategies ‘20200 Strategy’ and ‘Blue Geely Initiative,’ Geely is experiencing higher demand for high-end automatic gearboxes that offer upwards of six gears. Geely’s own capacity for gearbox production is not able to keep up with demand, the company said in a statement.

The new joint venture will allow Geely to introduce new products that meet customer requirements for superior driving and comfort, as well as fuel efficiency. By creating a new joint venture, Geely is able to take part in the management of the operations, as well as lowering its purchasing costs for these gearboxes, while raising efficiency.

“By establishing this new joint venture with Aisin we will be able to raise Geely’s core competencies in powertrain development and production, and accelerate our 20200 Strategy and Blue Geely Initiative. From today both parties will be able to work together on technology development and application to create a long-term strategic partnership,” said Geely Auto Group President and CEO An Conghui.

Within a climate of increasingly fierce competition in the global market and slower growth in the domestic market, Geely Auto sold 1.247 million units in 2017, a 63% year-on-year increase. The company’s market share of passenger cars in China reached 5.06%, an increase of 1.75% from the previous year. Joining the coveted ranks of automakers with more than one million in annual sales, Geely’s strategic goal is to reach an annual sales volume of two million units. For 2018, Geely Auto aims to sell 1.58 million units, a 27% increase from the previous year.