French Groupe Renault and China’s Geely Holding will set up a joint venture to build hybrid vehicles in South Korea. This is reported by Reuters, citing its sources in the companies.
Cars will be produced under a newly created independent brand, and most of them will be exported from Korea to the United States, since there is a free trade regime between the countries (that is, Korean goods are not subject to import duties into the United States).
Renault will provide the joint venture with an automobile plant belonging to it Renault Samsung, which has suffered large losses for many years due to low demand for products – for example, from January to November 2021, it sold only 120 thousand cars.
With the help of Geely, the French concern also expects to return with fundamentally new models to the Chinese market, which it was forced to leave in 2020 due to poor sales of its cars.
The joint brainchild of Renault-Geely will rely on the CMA (Compact Modular Architecture) platform – the Chinese have developed it together with Volvo Cars (part of Geely since 2010). Renault will focus in the joint venture on the development of car bodies and design.
Geely wants to use the new JV to “proxy-export” its cars to the US. Due to political and economic differences, it is almost impossible to supply cars to the United States from China – the Americans impose increased import duties on them, and in addition, the certification bodies in the United States are sharply opposed to Chinese cars. According to Reuters, Geely wants to start production of cars of its sub-brand Lynk & Co in Korea for export to North America. In particular, a compact crossover Lynk & Co 01 with gasoline and hybrid power plants can be prescribed for Renault-Samsung. In addition, Renault’s manufacturing base will help Geely gain a foothold in the Korean market.
Do you think the Renault-Geely partnership will be productive?