SHANGHAI – Geely Automobile Holdings Ltd. expects rising commodity prices and global chip shortage To put pressure on its profitability and sales this year, the Chinese company said Wednesday, after announcing a 12 percent drop in profits in 2021.

The automaker, thanks to its investment in Volvo cars and Mercedes, reported revenue in 2021 of 4.85 billion yuan ($ 761.64 million) compared to 5.53 billion yuan in the previous year. Revenue grew 10 percent to 101.6 billion yuan.

“Increased competition in China, rising commodity prices, other pandemic disruptions and a global shortage of chip supplies have shown no signs of fading and should continue to put pressure on the group’s sales and profitability in 2022,” Geely Car the statement said.

Geely Automobile plans to sell 24 percent more cars this year – 1.65 million cars, saying it will seek to further expand export sales to new markets in Southeast Asia, the Middle East and Western Europe.

Car sales in China rose last year due to rising sales of new energy vehicles, but industry leaders warn of the impact of global semiconductor shortages and rising commodity prices, exacerbated by supply chain disruptions following Russia’s invasion of Ukraine.

On Wednesday, Geely Auto Group CEO Jerry Gunn said the company’s dependence on custom chips and globalized supply chains meant that the semiconductor shortage had a “pretty big impact” on production, a problem Geely will address through localization and its own chip development, among other measures.

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