Today (May 10), we learned from officials that Geely Automobile Holdings signed a share subscription agreement with Renault South Korea, a Korean subsidiary of the French Renault Group. Previously, the parent companies of the two parties signed a cooperation framework agreement in January 2022, deciding to jointly expand the Korean market.
After the transaction, Geely Automobile will hold a 34.02% stake in Renault Korea Motors through its subsidiary Centurion Industries Limited. Renault Group will remain the major shareholder, and Renault Korea will continue to be consolidated by Groupe Renault.
Geely’s ambition for the international market
The parent companies of the two parties, Geely Holding Group and Renault Group, announced their cooperation in January 2022 and will launch high-efficiency, energy-saving fuel and intelligent hybrid models in the Korean market, and plan to launch the above-mentioned products in overseas markets. The new car will be produced at Renault Samsung’s plant in Busan, South Korea, with mass production expected in 2024.
The new product will adopt the world-class CMA modular architecture developed by Geely’s R&D center in Sweden, and use Geely’s advanced hybrid technology. Renault and Renault Korea will leverage their strengths in forward-looking technology, styling, and user experience to provide local users with an experience that exceeds expectations.
The new product range will leverage the existing Renault Korea sales and aftermarket network. As of 2021, the Renault Korea after-sales system has ranked first in the domestic auto consumer survey for six consecutive years.
This capital increase reflects the strong confidence of Geely Holding Group and Renault Group in the huge potential of the Korean market. At the same time, in the Korean market, the two companies will work together to help Renault Korea to enrich its product portfolio and achieve brand penetration in the Korean market and export market. Double growth in sales accelerated the implementation of Renault Group’s “Renaulution Plan”.
Renault curve returning back to the Chinese market?
In addition to the Korean market, these models will also be launched in other countries, which may be the most important starting point for the cooperation between the two parties.
In terms of Renault, due to poor sales in the Chinese market, Renault has withdrawn from the Chinese passenger car market in 2020, and its commercial vehicle and new energy vehicle projects have also been sluggish. The hand in hand with Geely this time is undoubtedly an opportunity to return to the Chinese passenger car market, and it can also be regarded as a “curve saved the nation”. Moreover, Geely should be the best partner Renault can find on the Chinese market, because Geely has enough experience in overseas cooperation, including cooperation with Volvo, ENGLON, Daimler, Lotus, Proton, etc. that fully demonstrates Geely’s strength in overseas cooperation.
For Geely, through the convenience provided by the Korea-US Free Trade Agreement, it can enter the US market and export its products to the world’s second-largest auto market, further expanding Geely’s international influence. Moreover, as a world-renowned brand, Renault’s traditional market is in Europe, with local dealers accounting for 50% of its overall sales channels, and its second-largest market is Russia. After the cooperation, it can help Geely to develop in Europe and more markets.
Last year, Geely made a lot of gains in overseas markets, with exports reaching 115,008 vehicles, a year-on-year increase of about 58%. At the same time, five new exporting countries were added, namely Laos, Chile, Egypt, Ukraine, and Bahrain. So far, Geely’s overseas exporting countries have reached 28 countries spanning five continents.
At present, The CMA architecture technology has been used by different brands such as Volvo, Proton, Geely and Lynk & Co, and has the ability to open, share and extend. The Lynk & Co brand, which was the first to use the CMA architecture, has already sold nearly 600,000 vehicles.
It is reported that in 2021, Geely Auto’s R&D investment will total 5.5 billion yuan, a year-on-year increase of 16.1%. The total R&D investment in the past five years will total 25.6 billion yuan. Geely’s financial report data shows that in 2021, Geely’s auto technology licensing revenue will be 1.275 billion, a year-on-year increase of 125%, which has become a new profit growth point for Geely Auto.