Annual Report 2007 - Hmdatalink.com hm datalink

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Management Discussion and AnalysisTotal budgeted capital expenditures for theoperating associates in 2008 amounted toapproximately RMB1 billion, which will mainlybe financed by the operational cashflow of theoperating associates, capital expansion at ZhejiangFulin, initial capital contributions to Hunan Geely,Shanghai LTI and Zhejiang Kingkong Auto R&D. Thebalance will be funded by bank borrowings. Majorinvestment projects planned for 2008 include:1. A major renovation and plant modifications atthe Phase I of Shanghai Plant to prepare forthe production of a localized version of TX4“London Taxi” by the Group’s 51%-ownedShanghai LTI starting from the end of 2008.Total annual production capacity at Phase IShanghai plant will be 40,000 units per shift.2. The construction of Phase II Ningbo plant toexpand the production capacity of “Vision”model. Annual production capacity of thePhase II Ningbo plant will be 50,000 units pershift.3. The upgrading and expansion at Xiangtanplant to facilitate the production of “Vision”model at Xiangtan plant starting from mid2008. After that, Xiangtan plant will be able toproduce both “Geely Kingkong” and “Vision”models.in competing businesses with the Company, subjectto compliance with applicable requirements of theListing Rules and applicable laws and regulationsupon terms to be mutually agreed as fair andreasonable, and at time determined and agreed bythe majority of the Company’s independent nonexecutiveDirectors. These three plants are currentlyconstructed by Geely Holding for the manufacturingand distribution of Geely sedans in three locationsincluding Lanzhou of Gansu province, Jinan ofShandong province and Cixi of Zhejiang province.Quality ControlThe Group’s five associates have set up a qualitycontrol system satisfying the ISO9000 qualitycertifications. In August 2007, the Ningbo plant, theassociates’ most important production base, wasawarded the official certifications in accordancewith the requirements of ISO/TS16949:2002. The keyfocus of the associates in the area of quality controlin 2008 is to prepare for the certification of theirremaining production facilities in Linhai, Luqiao andShanghai in accordance with the requirements ofISO/TS16949:2002 standards.In an undertaking agreed between Geely Holding,which is ultimately controlled by the Company’sChairman Mr. Li Shufu, and the Group, Geely Holdinghas undertaken to sell to the Group all its interestsin three new production plants to avoid engagingGEELY AUTOMOBILE HOLDINGS LIMITED23ANNUAL REPORT 2 0 0 7
Management Discussion and AnalysisCompliance with GovernmentRegulationsTo prepare for the Chinese government’s increasinglystringent requirements on emission control and toprepare for large scale exports in the coming years,the Group’s associates started to upgrade theirproducts to comply with the Guo IV and Euro IVemission standards, which are now required in Beijingand very soon in other major cities in China, in 2008.By 1 March 2008, all the associates’ key models like:“Free Cruiser”, “Geely Kingkong”, “Vision”, “Maple”series, “China Dragon” had passed the Guo IVemission standards.New ProductsMajor new product launches by the associates in2007 are summarized below:1. “Merrie Star” 2007 facelift (1.05L)2. “Geely Kingkong” power version (1.8L)3. “Vision” mid-end sedan (1.8L)4. “Free Cruiser” 2008 version (1.3L, 1.5L)5. “Maple Marindo” economy version (1.3L)6. “Maple Hysoon” sedan (1.5L, 1.8L)7. “Maple Haifeng” sedan (1.5L, 1.8L)8. “JL-Z142” 4-speed automatic gearboxes9. “JL-S148” manual gearboxesIn 2008, the Group’s operating associates plan tolaunch the following new products:1. “LC-1” economy hatchback (1.0L)2. “China Dragon” sport car (1.8L)3. “Geely Kingkong” hatchback (1.5L)4. “TX-4” taxi vehicle (2.4L, 2.5L diesel)GEELY AUTOMOBILE HOLDINGS LIMITED24ANNUAL REPORT 2 0 0 7
Page 3 and 4: Supplying the SAFEST, the MOST ENER
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Geely Automobile Holdings LimitedRo
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