Australian manufacturer drives innovation for Chinese automaker
When Chinese motor vehicle manufacturer, Geely Holding Group, sought to strengthen its position in the global automotive industry it turned to an Australian company to provide the technological advantage it needed.
Geely is China’s largest independent car and motorcycle manufacturer and is one of China’s top ten automakers. The company has a strong domestic presence and also sells vehicles around the world under numerous brands. Its strength as an emerging global player was reinforced in early 2010 when it acquired the iconic Swedish manufacturer Volvo Car Corporation from US automaker Ford. In short, Geely is a company with big ambitions.
A crucial component of its ambition is the Australian company DSI Holdings Pty Limited (DSIH). As Australia’s only automotive transmission manufacturer, DSIH has been a key supplier to the region’s automotive manufacturing industry, with a reputation for innovation and technical excellence.
That reputation caught the eye of executives at Geely, and in 2009 the company acquired DSI for approximately A$58 million. The acquisition delivered superior automatic transmission technology to Geely, backed by a team of 300 research and manufacturing staff at two facilities, Melbourne and Albury in regional New South Wales.
Importantly for Geely, the acquisition has given the Chinese automaker access to the latest automatic transmission technology, along with a research and development capability that will ensure the company is able to stay ahead of the competition.
For DSIH, Geely’s purchase came at a time when DSIH had entered into financial difficulties in the midst of the global financial crisis. The acquisition delivered significant financial resources and helped safeguard the employment of DSIH’s employees. In addition, by becoming part of Geely’s global supply chain, DSIH gained access to many new international markets, including China.
Access to technology and expertise
The acquisition provided Geely with access to advanced drivetrain technology, which is now proving vital to the company’s plans for growth in both the Chinese and global markets.
The DSIH transmissions are designed for vehicles with 1.8-litre engines and larger, and their advanced technology will also help Geely to cut fuel consumption within its models while providing operational improvements and additional cost savings.
The acquisition was driven by the vision of the chairman of Geely Holding Group, Mr Li Shufu, and supported by his staff. Mr Li says the Chinese market is developing in terms of its desire for automatic transmission vehicles, so it is important that Chinese manufacturers have access to six-speed automatic transmission technology to compete. His decision to invest in Australia was also backed by Australia’s stable political and business environment, and reputation for reliability and innovation in manufacturing.
“We see the market mix between automatic and manual transmissions to be at least 50 per cent,” Mr Li says. “Geely must have access to world class value-for-money technology solutions. Our Australian operations will act as an important part in Geely’s global strategy.”
The acquisition has meant that all current and future Geely vehicle models can be equipped with Geely’s own automatic transmissions, courtesy of DSIH. The company is targeting sales of up to two million vehicles by 2015.
International R&D collaboration
Research and development is continuing at DSIH, in close collaboration with Geely Holding Group. As a part of the Geely family, engineers from DSIH are working side by side with their counterparts from the Geely Automobile Institute to develop six-speed four-wheel-drive automatic transmissions for the Geely vehicle range. Mr Li says the teams are also working together on developing a seven-speed drivetrain technology project, as well as an eight-speed automatic transmission with high torque.
The success of the acquisition is reflected in DSIH having added an additional 150 staff in research and development and manufacturing since June 2009.
Geely also plans to export its Australian-built transmissions for use in Chinese-built London cabs – something that has only been made possible for both Geely and DSIH through their collaboration.
“The six-speed rear-wheel-drive automatic transmission for London taxis has completed development works and will be launched in China soon,” Mr Li says.
Geely plans to build three automotive transmission plants in China to manufacture DSIH-designed automatic transmissions. These will be installed in vehicles sold in the domestic market and globally, and may also be sold to other manufacturers around the world. One of these plants, the A$72 million Hunan Jisheng International Drivetrain Systems factory will produce 200,000 Australian-designed front wheel-drive transmissions for the Chinese market with production commencing in 2011.
Additional opportunities also exist to supply DSIH-designed automatic transmissions to global manufacturers including for the Korean manufacturer Ssangyong and India’s Mahindra & Mahindra.
DSIH is proving to be a vital component of Geely’s long terms plans, providing a competitive advantage that is assisting Geely’s expansion in China and around the world.