Spend 1.3 billion into the shares Geely and Renault Touto What?

After the acquisition of Volvo and the acquisition of Daimler, Geely Automobile bound Renault. On May 10, Geely Automobile announced the signing of a share subscription agreement with Renault Korea Automobile (hereinafter referred to as "Renault Korea"), a Korean subsidiary of Renault Group. According to the agreement, Geely Automobile intends to subscribe for 34.02% of Renault Korea's shares. This means that Geely "uses" Renault to enter the Korean market. Industry insiders believe that after Geely Automobile invests in Renault South Korea, it can not only accelerate Geely Automobile's technology to go to sea and recover research and development costs, but also help the lack of funds to accelerate the implementation of Renault's electrification strategy. In addition, we are also looking for partners for Renault's electrified models to enter the Chinese market in the future.

Subscribe for more than 30% of the shares

Geely Automobile, through its subsidiary Centurion Industries Limited, holds a 34.02% stake in Renault Korea, which is priced at approximately KRW 264 billion (about 1.376 billion yuan), equivalent to a target share of 5,818 won (about 30.3 yuan) per share, according to the announcement. After the completion of the transaction, Renault Korea's majority shareholder will remain Renault Group and will continue to be consolidated by Renault Group.

This time Geely Automobile's stake in Renault South Korea has long been indicative. In August last year, Geely Group, the parent company of Geely Automobile, and Renault Group jointly announced that the two sides had signed a memorandum of understanding to establish an innovative partnership. The memorandum of understanding shows that the two sides will cooperate in China and South Korea, and in the future, the two sides will focus on sharing resources and technologies in the hybrid market, and cooperate in key markets between China and South Korea. In January this year, Geely Holding Group and Renault Group jointly announced that they will launch high-efficiency, energy-efficient fuel and intelligent hybrid models in the Korean market.

The relevant person in charge of Geely Automobile said: "The new product will adopt the world-class CMA modular architecture developed by Geely in the R&D center in Sweden, and use Geely's advanced hybrid technology. Renault and Renault Korea will leverage their forward-looking technology, styling and user experience to provide local users with an experience that exceeds expectations. ”

It is understood that the CMA architecture is a set of modular architecture jointly created by Geely Automobile and Volvo for global Industry 4.0, with high flexibility and malleability, which can create a model platform suitable for a variety of body forms and sizes, not only support traditional energy, but also compatible with new energy power systems, including HEV hybrid and PHEV plug-in hybrid systems, which have been widely used in Lynk & Co, Volvo, Polestar, Geely four major brands. According to the data, in the first half of last year, CMA structure models accounted for 25% of the total sales of Geely Group.

It is reported that in the future, the new product series launched by Geely Automobile and Renault Korea will use the existing Renault Korea sales and after-sales network and will be produced by Renault Samsung's factory in Busan, South Korea, and is expected to be mass-produced in 2024.

Spread the cost equally to expand overseas markets

In recent years, Geely Automobile has been achieving overseas mergers and acquisitions through Volvo, Proton, British brands, etc., and this investment in Renault Korea will further expand the overseas market layout for Geely Automobile.

On the one hand, the investment in Renault Korea will help promote the internationalization of Geely automobile products, use its existing technology and research and development level to occupy a place in the Korean market, and then achieve the long-term strategic goal of product internationalization; on the other hand, it will also have a coordination effect with the existing business, enabling Geely Automobile to further strengthen its research and development capabilities in automotive architecture and model technology, while seeking the development of the industrial value chain.

Currently, in the Korean market, Renault Samsung is among the top five automakers. Cui Dongshu, Secretary-General of the Passenger Car Market Information Joint Association, believes that Renault Group has certain resources and advantages as a global brand, and Geely Automobile can also take advantage of these advantages to export technology while expanding overseas market territory and expanding the market application scale of its own platform technology.

In recent years, after the acquisition of Volvo Cars, Geely Automobile has frequently joined hands with international car brands through shareholding. In 2020, Geely Holdings announced that it has established a smart brand global joint venture with Mercedes-Benz, "Smart Motor Automobile Co., Ltd." According to the agreement between the two parties, the engineering research and development of the new smart model will be responsible for the global R&D center of Geely Holdings, the global design department of Mercedes-Benz will be responsible for the design, and the new car will be produced in China and sold back to the world. This time, Geely Automobile also adopts a similar model to mercedes-Benz cooperation. The Beijing Business Daily reporter learned that the models produced by Geely Automobile and Renault South Korea will also be put into overseas markets.

In fact, Geely Automobile continues to expand its "circle of friends" of technology applications, and can also share the cost of technology research and development. The data shows that last year, Geely Automobile's technical services and licensing profits continued to grow, with an increase of 245.3% year-on-year. In addition, the Beijing Business Daily reporter noted that in the share subscription agreement signed by the two parties, it was agreed that in the two fiscal years of 2022 and 2023, Renault Korea would need to pay no less than 328 million yuan in dividends to Geely Automobile.

Introduce Gilly to turn around

Compared with Geely Automobile's "going to sea" demand, Renault Group hopes to bring capital into the market through Geely Automobile to alleviate the situation of capital shortage.

Since the "Ghosn incident", both the Renault Group and Nissan Motors in the Renault-Nissan alliance have been trying to recover. With electrification, Renault group wants to help companies eliminate their impact and unveil a new strategic plan for "Renaulution", which is seen as a lifesaver. Renault group has said that by 2025, 24 products will be launched, half of which are distributed in the C-class and D-segment markets, including at least 10 pure electric vehicles. At the same time, the Renault brand will provide more than 65% of pure electric and electrified models in Europe; by 2030, the proportion of Renault brand electric vehicles will reach 90%.

After the strategy was released, it was reported that Renault Group was considering selling part of its stake in Nissan Automobile, which may raise billions of euros for its electrification strategy and ease its long-standing tensions with alliance partners, and the buyer who wants to take over is Geely Automobile. At that time, although neither side responded, in terms of electrification transformation, Geely Automobile had a mature technology and platform, in addition to the pure electric technology route, Geely Automobile also released the Leishen Power brand, and its core product was "Leishen Zhiqing Hi · X Hybrid Platform".

In addition, the Performance of the Renault brand in the Asian market is far inferior to that of the European market. In 2020, Renault "broke up" with its joint venture partner Dongfeng Group, and Dongfeng Renault withdrew from the Chinese passenger car market. In the Korean market, Renault Korea's annual pre-tax profit last year was only 120 million yuan, down 71.2% year-on-year.

Industry insiders believe that Geely Automobile has obvious advantages in the industrial chain and research and development platform, which can help Renault Group in the global market. At the same time, Renault wants to break through with the electrification strategy, not only needs funds, but also needs to find a new foothold in the Chinese market, Geely Automobile has been firmly in the top position of domestic independent brands, whether it is technology platform, product update or transformation speed are in the forefront, Renault Group can also use Geely Automobile's resources in China to re-kill back to the Chinese market.

Beijing Business Daily reporter Liu Yang liu xiaomeng