by Norihiko Shirouzu
BEIJING (Reuters) – France’s Renault and China’s Geely Holding are likely to announce an agreement soon for the joint production in South Korea of the Chinese automaker’s hybrid vehicles and explore the possibility of exporting tax-free vehicles to the United States, a – we learned from three people familiar with the case.
This joint venture agreement has been on track since the start of the year and also covers joint operations in China, which will allow the French manufacturer to consolidate its struggling activities in South Korea, and more broadly its presence in Asia.
According to these sources, Renault, which left the Chinese market last year by dissolving its joint venture with Dongfeng Motor Group, will be able to relaunch itself in the world’s largest automotive market thanks to this new co-managed JV, with a new brand focused on hybrid vehicles.
The cooperation between Geely and Renault is expected to result in a new range of hybrid vehicles, based on the modular platform for midsize vehicles Compact Modular Architecture (CMA) that the Chinese manufacturer shares with Volvo and uses in its production lines in China, these sources said.
Also according to these sources, the diamond group will focus on vehicle design, sales and marketing of this new brand in China.
A PATH TO THE US MARKET FOR GEELY?
For Geely, the interest of this agreement lies in the fact that it will allow it to anchor its production in South Korea, by accessing the assembly plant that Renault owns there.
The French manufacturer has been producing and selling vehicles in the country for more than two decades, via a local brand with a unit of the Samsung conglomerate.
According to one of the sources, one of the models that Geely plans to produce at Renault’s plant in the South Korean port of Busan is the Lynk & Co 01 SUV, currently available in three versions, petrol, hybrid or electric.
According to the three sources, the goal is to locate production of certain models of Lynk (gasoline and hybrid models according to one of the sources) in South Korea, which suggests that Geely and Renault could use local suppliers. .
According to two sources, this agreement would also allow Geely to gain indirect access to the American market, the second largest automobile market in the world, by taking advantage of the free trade agreement between South Korea and the United States.
RENAULT SAMSUNG VERSIONS OF LYNK SUVS
On the Renault side, this agreement would strengthen the French group’s foothold in South Korea by building Renault Samsung versions of certain Lynk & Co models in Busan.
Renault Samsung Motors, of which Renault owns 80%, has experienced difficulties in recent years. Sales – including exports – have almost halved since 2017, to 116,000 vehicles last year.
Over the year 2021, sales over eleven months, at the end of November, amounted to 120,000 vehicles.
In China, Renault and its alliance partner Nissan had the same partner Dongfeng, until the Renault-Dongfeng joint venture dissolved last year.
Renault and Nissan have long designed, produced and marketed vehicles together in order to share platforms and equipment and components and to reduce costs.
For now, it is not yet determined to what extent Renault’s partnership with Geely will impact the Renault-Nissan alliance.
(Report Norihiko Shirouzu in Beijing, with the contribution of Joyce Lee and Heekyong Yang in Seoul; French version Myriam Rivet, edited by Blandine Hénault)