Geely, Renault to announce JV soon – Korean-made Lynk & Co SUVs could see 'backdoor' exports to US – paultan.org12/22/2021
Geely and Renault are soon to announce a joint venture (JV) deal that will see both jointly produce the Chinese carmaker’s vehicles in South Korea. Doing so would also open the possibility of “backdoor” duty-free exports to the US, Reuters reported, quoting three people familiar with the matter. South Korea has a free-trade agreement (FTA) with the US.
The report says that the joint venture deal, making true the MoU that was signed in August, has been in the works since early 2021, and it also involves joint operations in China. The deal would help the French carmaker shore up its struggling business in South Korea and boost its presence in Asia, it added.
The wire report’s sources added that Renault, which exited China in 2020, will gain a way back into the world’s biggest auto market by forming a new, plug-in hybrid-focused brand. Both parties will jointly manage the new brand.
The new range of green cars will use Geely’s Compact Modular Architecture (CMA) platform, which is also shared with Volvo, as well as the Hangzhou-based carmaker’s domestic supply chains and manufacturing facilities. Meanwhile, Renault will focus on vehicle design, plus sales and marketing for its new brand in China, the sources added.
Geely’s gains will be outside of China, where it will get a production foothold in South Korea overnight. One of the sources said that Geely plans to make the Lynk & Co 01 SUV at Renault-Samsung’s plant in Busan, specifically the pure ICE and hybrid versions of the 01 (there’s also a PHEV). Apparently, the plan is to localise production of some Lynk & Co hybrid models in Korea.
There’s more to this multi-faceted JV. Renault Samsung Motors, which is 80% controlled by Renault, will make its own versions of the Lynk & Co models produced in Busan. It is hope that this will give RSM a much-needed boost – sales, including exports, have almost halved from 2017 to just 116,000 units last year. RSM’s year-to-date sales until November is 120k units.
Now, getting into bed with a new Chinese partner isn’t a bad thing, especially when there seems to be many areas with mutual benefits. However, Renault is publicly married to Nissan and it is not known how this new relationship would affect the Renault-Nissan Alliance.
The report points out that in China, both Renault and Nissan had the same local partner (Dongfeng) before the Renault-Dongfeng JV was ended last year. Both the French and Japanese carmakerrs also typically design and produce models with shared platforms and components to reduce costs.
Nissan voiced its displeasure the last time Renault flirted with other parties, scuppering the planned merger with Fiat Chrysler Automobiles (FCA) in 2019. However, this JV with Geely is a much milder affair, with no equity swap involved.
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