Geely buys 34% of Renault Korea Motors in South Korea

Geely and Renault are further strengthening their ties in South Korea, where the Chinese manufacturer has just acquired 34% of Renault Korea Motors. The goal is to jointly develop and produce an organic hybrid model in South Korea from 2024.

Last January, Renault and the Geely Group announced a partnership agreement for the production of thermal and hybrid cars in South Korea. This collaboration – which is part of the plan Renaulution – was a follow-up to an initial announcement in August 2021. Geely promised to help Renault sell hybrid cars in China, while the French carmaker would allow Geely subsidiary Lynk & Co to enter the southern market.

First effect with a 34.02% stake, which Geely took over in Renault Korea Motors, formerly Renault Samsung Motors, or in short RSM. Note that the Samsung card still holds 19.9%.

According to the Bloomberg site, the financial deal was made through Centurion Industries Limited, a wholly owned subsidiary of Geely, which would have paid out about $ 207 million (about $ 175 million). According to Renault Korea Motors, this participation will “create synergies with Geely in South Korea, a market with strong growth potential“The goal is to compete with the Hyundai group (Hyundai and Kia), which in 2021 had a 70% market share with 1.2 million vehicles sold. In comparison, Renault Samsung Motors had sold 61,000.

From 2024, the two units will produce thermal and hybrid vehicles at Renault Korea Motors’ plant in Busan (South Korea), where Renault owns 80% of the shares. The vehicles produced will initially be reserved for the South Korean market before proceeding to export.

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Future vehicles will be based on “Geely Groups Compact Modular Architecture (CMA) through its R & D center in Sweden”And will also use hybrid engines from Geely. As regards Renault and its subsidiary, their contribution is limited to “their expertise in design and customer experience, while bringing innovative technologies”.

Clash announced with Nissan?

It remains to know the reaction of Nissan and Mitsubishi, excluded from these discussions. An anonymous source quoted by the site Business Times, reported that Nissan had not really appreciated not being involved in the discussions between Renault and Geely. The same source claimed that the two companies “used to collaborate in areas such as research and human resources” but it “collaboration and communication had diminished”.

Admittedly, the Korean market is no longer relevant to Nissan and its luxury brand Infinity after their total withdrawal in December 2020 – after 16 years of presence – due to weak sales, the health crisis and the anti-Japanese mood; however, the conquest of the Chinese market, considered as “the largest car market in the world“, where Renault has embarked on another actor, does not exist.

In fact, the Renault-Nissan-Mitsubishi alliance unveiled in May 2020 ““leader-following” scheme to increase the efficiency and competitiveness of vehicles and technologies”. Specifically “each member will become a referee in the regions where he has the best strategic assets and will act as a facilitator and support for the competitiveness of the others”. Thus, Renault would be the referee for Europe, Russia, South America and North Africa, Nissan for China, North America and Japan and Mitsubishi for Asia and Oceania.

Renault’s new strategy of working more closely with Geely to (re) conquer the Chinese market could lead the French to “reconsider its capital ties with the Japanese automaker“, said Bloomberg News business page last month.

Let us finally hope that this collaboration between Geely and Renault will be more fruitful than the marriage, which was concluded on 6 September 1993 and torn apart on 2 December the same year (!), Between Renault and a certain Volvo, which since has become the property of … Geely 2010.

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