Geely’s Investment Sees BMI View Playing Out
BMI View: Geely's latest investment to assemble and eventually manufacture CBU's in Sri Lanka plays out BMI 's long-held view on the attractiveness of Sri Lanka as an upcoming auto manufacturing hub. We also believe there is plenty of growth potential for Geely's exports to its targeted South Asia and Far East markets due to the current low base of exports from Sri Lanka to these markets. The recent interest in the Sri Lankan auto industry from global automakers bodes well for new investments from component manufacturers as they aim to exploit the agglomeration effects of being close to their customers.
Chinese automaker, Geely Automobile, is planning to enter Sri Lanka in collaboration with Sri Lankan automaker Micro Cars Ltd. According to Geely director, Martin Xiang, Geely has realised that Sri Lanka has become a key market and a South Asia manufacturing hub for automakers, due to its strategic location. The new plant, with 500 employees, will start production in January 2015 and will initially assemble cars before progressing to a total manufacturing process. The company plans to use Sri Lanka as its production hub, and export to South Asia and the Far East.
Geely's proposed investment plays out BMI's view on the strong potential of Sri Lanka as an auto manufacturing hub ( see our online service, September 05, 'Hero Faces Competition In Global Expansion'). With domestic violence between the government and the Tamil Tiger separatist group ceasing over three years ago, Sri Lanka's political stability has been steadily improving which has made it a more attractive place for foreign companies to invest in. We believe that Geely's confidence in the market will create a strong signal for other foreign automakers to consider investing in Sri Lanka, due to Geely's increasing prominence as a global auto player after buying Swedish automaker Volvo.
|Plenty Of Room To Grow|
|Sri Lanka- Export Trade With Selected Countries, US$ Millions (LHS); Share Of Total Exports Among Selected Trading Partners (RHS)|