Recently, according to Reuters, Geely Holdings and France's Renault may soon announce an agreement to produce hybrid vehicles based on Lynk & Co's energy-saving platform in South Korea and consider exporting duty-free cars to the United States to expand new markets. In this cooperation, Geely Automobile exports platform and technology, and Renault Automobile is responsible for brand building and sales services, and the two sides are a new cooperation model.
Renault Samsung, which owns an 80 percent stake in South Korea, will produce the product at its Busan plant in South Korea. It is reported that the first model produced by Geely and Renault in South Korea may be Lynk & Co 01, which will provide two power types of traditional fuel vehicles and plug-in hybrid systems, and will use the Geely CMA architecture (the mid-size car chassis structure shared by Geely and Volvo Cars).
In fact, Renault and Geely announced as early as August that they would "explore the localization of Lynk & Co models" in South Korea, while also introducing Renault brand hybrid vehicles to China. In the same period, in South Korea, Samsung Card, a subsidiary of Samsung Group, decided to end its more than 20-year partnership with Renault and withdraw from the automotive market.
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 August, Samsung announced plans to sell all of its stake in Renault Samsung, representing an end to Samsung's 27-year automotive business.
Renault Samsung's partnership with Geely may help support its poor sales in the South Korean market. After Hyundai Motor, Kia and GM in South Korea, Renault Samsung's total sales of vehicles, including exports, total sales of Renault Samsung in 2020 were 116,000 units, down half from 2017, and 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.
In September, the French media outlet Le Echo reported that Renault was rectifying its troubled Chinese market business. Last year, Renault withdrew from the Dongfeng Renault joint venture and exited the Chinese passenger car market. In the field of commercial vehicles, this year, Renault began negotiations to terminate its cooperation with Brilliance China. Recently, the Renault Brilliance Gold Cup was revealed to have stopped paying employees' salaries, and the supplier of the Renault Brilliance Gold Cup said that the company has been sued by the supplier for months of arrears.
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.
Faced with the dilemma, Renault 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. In August this year, Geely Automobile confirmed the signing of a memorandum of understanding with Renault, pointing 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.
Renault will build a new brand that will be co-managed by Geely and Renault, and the two companies can share supply chains and manufacturing facilities. Renault will focus on the design, sales and marketing of the new brand. Partnering with Geely could help Renault restart its business in China and return to China, the world's largest auto market.
According to data released by the Korea Automobile Industry Association, domestic car sales in South Korea in the first half of 2021 decreased by 2.6% year-on-year to 924,000 units, the same as the average of the past three years, the traditional Korean market prefers Korean national brands, and in recent years, only high-end German cars have increased.
For Geely, if the cooperation with Renault is only aimed at the Korean auto market, it may not be attractive enough from the stable and small growth space in South Korea. According to Reuters, Geely's main consideration is whether it can use the free trade agreement between the United States and South Korea to export duty-free Convertible hybrids to the US market, giving Geely the opportunity to enter the US market.
Some media said that due to the impact of the epidemic and Sino-US policies, Chinese automakers such as Chery have shelved their plans to enter the US market, and with the participation of French Renault and South Korean factories, Geely may be able to bypass this obstacle. However, at present, for the cooperation between Geely and Renault, Geely has not released the specific details of this plan.
In November 2021, China's passenger car market fell for the sixth consecutive month. But fewer than 2.15 million passenger cars were delivered in November, the highest-selling month of the year. Compared to November 2019, sales increased by only 5.7%. The cumulative sales from January to November this year only increased by 7.5% year-on-year. Although Geely Automobile has once again become the best-selling brand in China, its sales have still dropped by 17.1%. Obviously, China's auto market, which has passed a period of high growth, is gradually approaching saturation.
Previously, Lynk & Co has entered the European market and plans to enter the Australian market in 2025. Nowadays, Lynk & Co Motors enters The production and sales of South Korea, in addition to the target of the US market, Geely Group may be able to gain a manufacturing foothold in South Korea and gradually cover the Asian market by expanding the Korean market, which will help Geely go further from covering the global market. Previously, it was reported that Li Shufu, chairman of Geely Holding Group, will increase his stake in Geely Automobile by 2%, which Geely Automobile said shows the confidence of the company's shareholders in the company's future development.