According to a number of media reports, Geely Automobile and The French Renault Group will soon announce a new cooperation, the Renault assembly plant in Busan, South Korea, will produce Geely's Lynk & Co 01 hybrid model, and consider the possibility of entering the US market in a tax-free manner for Korean-made cars, so that Geely can push to new markets.
On August 9 this year, Geely Automobile confirmed the signing of a memorandum of understanding with Renault, and in the brief memorandum released at that time, it only pointed out the direction of cooperation discussed by the two sides, including the landing of Renault's new brand in the two markets, the development of Renault hybrid models based on the Geely platform, and the launch of models based on the Lynk & Co platform to the Korean market. In September this year, according to the French media "Echo" newspaper, Renault Group is rectifying its troubled Chinese market business, this layer of expression includes two layers of meaning, including the termination of some existing businesses and the search for more suitable cooperative relationships, and then Renault negotiated to terminate its cooperation with Brilliance China.
Last year, France's Renault announced its withdrawal from the Chinese passenger car market, and Dongfeng Renault sold only 663 vehicles and produced 14 vehicles nationwide in the first quarter of last year. In April, Renault officially announced the termination of its partnership with Dongfeng Motor and the cessation of sales of Dongfeng Renault models. According to the financial report, the global sales of Renault in France in 2020 was 2.95 million units, down 21.3% year-on-year, with a loss of 8.05 billion euros, Renault showed its first loss in 10 years in 2019, but only lost 141 million euros that year, and the operating conditions deteriorated rapidly in 2020, for which Renault also sold its headquarters building in France. Renault's traditional market is Europe, where local dealers account for 50% of the overall sales channel, with its second largest market being Russia.
In terms of economic performance, the world has shrunk sharply due to the impact of the epidemic, and only the Chinese auto market has recovered rapidly after controlling the spread of the new crown epidemic, but Renault Automobile announced the withdrawal of Dongfeng Renault joint venture to withdraw from the Chinese passenger car market before this wave of trend, missing out on the growth opportunity in the Chinese market. Of course, because its market share is not large, even if it does not withdraw, it can only be a drop in the bucket for the performance of its entire group. Renault faced the dilemma and proposed the "Renaulution" strategic plan. At the heart of this plan is the use of existing assets, with a focus on the launch of local models in the electric vehicle and light commercial vehicle segments. Renault automobiles have lost the passenger car market in China, and in the field of commercial vehicles, Renault and Brilliance Renault Brilliance, which were also not performing well, as of yesterday, the media reported that it had begun to suspend wages and recommended that employees voluntarily leave. In addition to the cooperation with Brilliance, Renault also retains easyJet and Jiangling Group's new energy projects, in 2020, easyJet produced Renault eno sales of only 1205 vehicles, down 95.3%; in the same period, Jiangling new energy sales of 3842 vehicles, down 74.2% year-on-year, Renault urgently needs to make progress in some new areas in the short term.
According to foreign media reports, Geely and Renault will announce the establishment of a new hybrid vehicle joint venture to allow Renault to return to the Chinese market, on the other hand, the two sides will use Renault Holdings' Busan plant in South Korea to jointly produce Geely hybrid vehicles.
Renault holds an 80.4% stake in South Korea's Renault Samsung Busan, which ranks Hyundai Motor, Kia and South Korea's GM in 2020, and in 2020, Renault Samsung's total car sales, including exports, were 116,000 units, down half from 2017, and the total sales of 120,000 vehicles in the first 11 months of this year rebounded slightly. In the past November, the five major Korean automakers sold 600,300 units, down 11.4% year-on-year.
Renault Samsung was originally a Samsung automobile, founded in 1995 by the late Samsung Group Chairman Lee Kin Hee, and it was not long after its establishment that it encountered the Asian financial crisis. In 1999, Renault took the opportunity to bid 70.1% of the shares of $512 million, immediately becoming a major shareholder, and then further increased its holdings to 80.4%. In order to retain the original users and the popularity of the Samsung brand in Korea, Renault Samsung has been using Samsung as a car brand, and Renault has signed a 10-year trademark use agreement with Samsung, for which Renault has to pay 0.8% of sales as a trademark licensing fee every year, and in 2010, this authorization must be extended for 10 years to 2020. However, after the expiration of last August, the two parties did not renew the agreement on the use of the trademark, when the market speculated that Samsung might withdraw from Renault Samsung. In August, Samsung officially announced that it plans to sell all of its shares in Renault Samsung, which also means that Samsung has terminated its 27-year automotive business. Busan, the last of South Korea's worst hits during the Korean War, is a port city through which Renault Samsung used to export to Europe. In the middle of this year, Renault Samsung announced that it would stop production due to chips, and in the previous three years, it had also suffered from the impact of worker strikes, losing nearly 80 billion won last year. Not to make money, there are more things, because retaining this business, but also affected the willingness of other OEMs to purchase Samsung chips, more importantly, Samsung Group Vice President Lee Jae-yong obviously has no ambition for the automotive business, Renault Samsung is expected to change its name to Renault South Korea in the future, Samsung may symbolically continue to hold a small amount of equity.
According to data released by the Korea Automobile Industry Association, in the first half of 2021, South Korea's domestic car sales decreased by 2.6% year-on-year to 924,000 units, which is the same as the average of the past three years. Geely Automobile has a number of overseas factories, and this situation is closer to the Malaysian Proton, but in the Malaysian market is not the same prospect, local brand competition is less, Geely can cut into the growing Southeast Asian market through here, Proton in 2020 after obtaining Geely's capital and model import support, the market share in 2020 is 20.5%, almost doubled compared with 2018, second only to another local brand Beilu Perodua.
The business between Geely and Renault is clearly not based on the prospects of the Korean market, as it is too stable and has little room for growth. According to the media, Geely may be studying whether it can use the free trade agreement signed between South Korea and the United States to export duty-free hybrid vehicles to the US market. With the outbreak and U.S.-China tensions intensifying, Chinese automakers such as Chery have shelved plans to enter the U.S. market, and with the participation of French Renault and South Korean factories, Geely may be able to bypass this obstacle.
Geely has not yet released the specific details of this plan, and on Friday, the listed company Geely Automobile issued an announcement that the company's acquisition of 220 million shares of ordinary shares of Extreme Kr from Geely Group was approved by the shareholders' general meeting. In addition, Li Shufu, chairman of Geely Holding Group, will increase his stake in Geely Automobile by 2%. Geely Automobile said this shows the confidence of the company's shareholders in the company's future development.