Everyday Finance exclusive, quick attention
On May 10, Geely Automobile announced that it will hold a 34.02% stake in Renault Korea Automobile through its subsidiary, Centurion Industries Limited (abbreviated as "CIL"), and launch fuel and smart hybrid models in the Korean market. The new car will be produced at Renault Samsung's plant in Busan, South Korea, and mass production is expected in 2024.
As early as January this year, the parent companies geely holding group and Renault Group signed a cooperation framework agreement to use Geely's technology to superimpose Renault's korean automobile sales network to enter the Korean market, and plan to put the above products in overseas markets.
As of midday on May 10, Geely Automobile was down 4.48% at HK$11.08 per share.
Source: Flush
Geely and Renault "hugging"
Under the subscription agreement, CIL agreed to subscribe for 34.02% of Renault Korea Motor's shares for a total consideration of approximately KRW 264 billion (approximately RMB1.376 billion). Renault Group will remain the majority shareholder, and Renault Korea Auto will continue to be consolidated by Renault Group.
The new product will feature a world-class CMA modular architecture developed at Geely's R&D center in Sweden and use Geely's hybrid technology. The new product line will leverage Renault's existing Automotive sales and aftermarket network in Korea. According to the data, as of 2021, Renault's Korean automotive after-sales system has ranked first in the domestic auto consumer survey in South Korea for 6 consecutive years.
The "hugging group" between Geely and Renault is regarded as one of the "self-help" measures of the Renault Group. Founded in 1898, Renault Group is a well-known french veteran car company. But in recent years, Renault Group has suffered huge financial losses. According to the 2020 annual financial report, Renault's global sales in 2020 were 2.95 million vehicles, down 21.3% year-on-year; operating income fell 21.7% to 43.5 billion euros, with a net loss of 8.05 billion euros, about 63 billion yuan, the largest annual loss in the history of Renault.
In order to get rid of the predicament, Renault Group officially released the "Renaulution" strategic plan in January 2021, which is divided into three stages: "rejuvenation", "innovation" and "change", and adjusts the production capacity, the model platform will be optimized from 6 to 3, and the powertrain will be optimized from 8 series to 4 series. Launch 24 products by 2025, including at least 10 pure electric vehicles. By 2025, the Renault brand will complete a new market layout for electric vehicles and fully enter the high-end value chain in the field of mobility.
Industry analysts pointed out that the capital increase reflects the confidence of Geely Holding Group and Renault Group in the potential of the Korean market, and the cooperation is expected to achieve double growth in the penetration rate and sales volume of the brand in the Korean market and export market, and accelerate the landing of Renault Group's "Renaulution Plan".
Geely Automobile's "going to sea" accelerated
China's automobile exports maintained a high growth rate. According to data compiled by the General Administration of Customs compiled by the China Association of Automobile Manufacturers, from January to March, a total of 676,000 vehicles were exported from the mainland, an increase of 57.8% year-on-year; the export value of complete vehicles was 11.75 billion US dollars, an increase of 87.9% year-on-year. Among the main export varieties of mainland automobiles, the export volume of passenger cars ranks first; pure electric motor vehicles rank second, and the growth rate is the most significant.
"Going to sea" is one of the key points in the strategic planning of Chinese car companies such as Geely Automobile, and recently the company has achieved complementary advantages and quickly opened up overseas markets through overseas acquisitions. According to public information, Geely Holdings currently holds six brands, including Volvo Cars, Polestar, Lynk & Co, Geely Automobile, London Electric Vehicles, and Long-range Commercial Vehicles, and has strategically invested in Proton Motors, Lotus Automobile and Taili Flying Automobile.
In 2010, Geely acquired for $1.5 billion for a wholly-owned stake in Ford Motor Company's Volvo Cars in Sweden, including three factories, more than 10,000 patents, a complete R&D system, employee system, parts supply chain, and a global sales and service network.
In May 2017, Geely Group signed a contract to acquire 49.9% of the equity of Malaysian vehicle company Proton and 51% of the equity of Proton's supercar brand Lotus to enter the Southeast Asian market, the right-hand drive car market and the supercar market.
In November 2017, Geely Group announced that it had reached a definitive agreement with Terrafugia Flying Automobiles to acquire all of Terrafugia's businesses and assets.
In February 2018, Geely Group, through its overseas corporate entities, acquired 9.69% of the voting shares of Daimler AG for US$9 billion, becoming the largest shareholder of Daimler, the parent company of Mercedes-Benz Motors.
CITIC Securities pointed out that the electrification of automobiles will transform the drive system from the traditional "engine + gearbox" to "battery + motor + electronic control", the supply chain will shift from closed to open, and China's electrification supply chain can achieve overseas with cost advantages.
Editor: Ya Wenhui