Is this a "good business" to take what you need?
Text | Caijing reporter Li Haoyin
Edit | Shi Zhiliang
Geely Automobile's overseas strategy is the next city, this time in South Korea.
On May 10, Geely Automobile Holdings (0175. HK, geely automobile) signed an agreement with Renault Group to subscribe for 34.02% of renault Korea Motors Co., Ltd.'s capital increase, and the cooperation is subject to approval by the relevant departments.
"Finance" reporter learned from insiders that the new equity structure in the future is: Renault accounts for 52.82%, Geely Automobile will account for 34.02% through its subsidiary Centurion Industries Limited, Samsung accounts for 13.13%, and employees account for 0.03%.
Geely Automobile will become the second largest shareholder of Renault Korea Motors. Renault Group maintains its majority shareholder status, and Renault Korea Automobile will continue to be consolidated by Renault Group.
As of now, Renault Korea Auto is owned by Renault BV (Renault Group BV), Samsung Card (029780.KRX, registered in South Korea, mainly a credit card business limited company), and employee stock ownership plan (ESOP Pool) holding 80.05%, 19.9% and 0.05% of the shares respectively.
The agreement was finalized that the subscribed cash was 264 billion won (about 1.376 billion yuan), equivalent to 5818 won per share (about 30.3 yuan per share).
The relevant person of Geely Automobile Holdings told the "Finance" reporter that the investment is a strategic cooperation between the two groups, indicating that Geely and Renault are optimistic about the future of RKM.
In January this year, Geely Holding Group signed a framework agreement with Renault Group to launch high-efficiency, energy-efficient fuel and smart hybrid models in the Korean market, and plans to launch these products in overseas markets. The new car will be produced at Renault Samsung's plant in Busan, South Korea, and is expected to be mass-produced in 2024.
In the industry's view, after this investment, Renault can reduce costs and increase efficiency, boosting global change; Geely uses Renault's relatively mature sales system to deploy globally at low cost.
"For both sides, this is an investment with less input and optimistic output," Yi Ran, founder of Road Flight Consulting, told the "Finance" reporter that the investment effect of Renault in South Korea is difficult to say successful, and it is quite difficult to maintain the Korean market at the moment of the new four modernizations of automobiles. For Geely, starting from scratch in South Korea, the cost is high, the effect is slow, and the brand acceptance is also quite challenging.
According to MarkLines, new vehicle sales to South Korea's top five automakers will fall 10.8% to 1.434 million units in 2021. By enterprise, Hyundai and Kia together accounted for 88% of the domestic consumer market, and the third place Renault Samsung sold 61,100 vehicles in the whole year, with a market share of 4.3%.
For Renault, this helps it reduce costs and increase efficiency to drive corporate change. In January 2021, The Renault Group unveiled a new strategic plan for "Renaulution", proposing three phases of "renaissance", "innovation" and "change": appropriately adjusting production capacity in response to the financial crisis, and optimizing the model platform and the number of powertrains. By 2025, 24 products will be launched, including at least 10 pure electric vehicles.
"Analyzing the shareholder composition, this is also the usual operation of the automotive industry," Yi ra added, adding that Samsung represents local capital; Renault and Geely are responsible for providing technology. Renault lacks high-quality hybrid and pure electric vehicle technology, and it just so happens that Geely has a lot of reserves in this regard. Because technology is in hand, the right to speak is stronger, the equity is relatively fairer, and the layout of overseas markets can promote internationalization.
Geely has a number of technology platforms, including CMA, which help to improve the versatility and stability of parts, reduce research and development and production costs, and accelerate product innovation. And support fuel, hybrid, pure electricity and other modes, in the face of complex overseas markets, but also more flexible.
In the process of switching from fuel vehicles to pure electric vehicles, hybrid models have become the hottest products in the transition period. In the face of many competitors, Geely is very confident in its Thor hybrid technology. "Based on the original intention of low fuel consumption, low price, high performance and strong power, Geely created a three-stop structure and became the only one in the market." Wang Ruiping, senior vice president of Geely Automobile Group, once told Caijing reporters.
Another view is that Geely's intention to lay out South Korea is to use the trade channels between South Korea and the United States to seek overseas markets, including North America, by producing in South Korea and then exporting. In this regard, it is also pointed out that compared with the US market with limited market share, the target of the road is still Renault's home base in Europe. Geely Automobile did not comment on this.
