Geely acquires 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 aim is to jointly develop and produce an ecological hybrid model in South Korea from 2024.

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

First effect with a 34.02% stake taken by Geely in Renault Korea Motors, formerly Renault Samsung Motors, or RSM for short. Note that Samsung Card still holds 19.9%.

According to the website Bloomberg, the financial arrangement was made via Centurion Industries Limited, a subsidiary 100% owned by Geely, which would have disbursed some 207 million dollars (approximately 175 million euros). According to Renault Korea Motors, this participation will “create synergies with Geely in South Korea, a market with strong growth potential“The objective being to compete with the Hyundai group (Hyundai and Kia), which in 2021 held 70% market share with 1.2 million vehicles sold. By way of comparison, Renault Samsung Motors had sold 61,000. .

From 2024, the two entities will produce thermal and hybrid vehicles in the Renault Korea Motors plant located in Busan (South Korea) in which Renault owns 80% of the shares. The vehicles produced will initially be reserved for the South Korean market before going on to export.

Future vehicles will be based on “Geely Group’s Compact Modular Architecture (CMA) through its R&D center located in Sweden” and will also use hybrid engines from Geely. As for 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. This same source claimed that the two companies “used to cooperate in areas such as research and human resources” more than “collaboration and communication had diminished”.

Admittedly, the Korean market is no longer relevant for Nissan and its luxury brand Infinity following their full withdrawal in December 2020 — after 16 years of presence — due to weak sales, the health crisis and anti-Japanese sentiment; however, the conquest of the Chinese market, considered “the largest car market in the world“, in which Renault has embarked with another actor does not pass.

Indeed, in May 2020, the Renault-Nissan-Mitsubishi alliance unveiled the ““leader-follower” scheme to enhance the efficiency and competitiveness of vehicles and technologies”. Concretely, “each member will become a referent 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 referent 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 collaborating more closely with Geely to (re) conquer the Chinese market could lead the French to “reconsider its capital ties with the Japanese automaker“, dixit the economic site Bloomberg News last month.

Finally, let’s hope that this collaboration between Geely and Renault will be more fruitful than the marriage, recorded on September 6, 1993 and torn on December 2 of the same year (!)between Renault and a certain Volvo, which has since become the property of… Geely in 2010.