Geely Auto buying 34% stake in Renault Korea Motors

China’s largest private carmaker Geely Auto said that it is buying a 34.02% stake in French auto manufacturer Renault Group’s subsidiary in South Korea for about USD207 million, as part of its efforts to explore overseas markets. The purchase reflects the two companies’ “strong confidence in the South Korean market’s strong potential”, they said in a joint statement. Renault will remain the majority shareholder in the subsidiary Renault Korea Motors. South Korea is the world’s fifth-largest car-producing country. Last year, it produced 3.46 million vehicles, with 1.62 million vehicles exported, according to the country’s Automobile Manufacturers Association. Geely and Renault said they will introduce new products to the subsidiary to grow its market share in the local market, which has long been dominated by Hyundai and Kia, and explore export opportunities as well.

The move came after Geely Auto’s parent company Geely Holding Group and Renault inked a deal earlier this year to produce hybrid vehicles and conventional gasoline-fueled vehicles in South Korea. The models will be built based on the Compact Modular Architecture (CMA) developed by Geely’s research facility in Sweden. The group’s other brands, including Lynk & Co and Volvo, use CMA as well. Renault will primarily contribute its expertise in design and customer experience. The vehicles will be produced at the current Renault Korea Motors facility in Busan, South Korea, with volume production forecast to begin in 2024, and will be marketed via its local dealership network.

Analysts say the deal with such a global carmaker as Renault is a sign of Geely Auto’s technological competitiveness. Geely Auto’s deal with Renault may facilitate the entry of its brands into European markets. Geely Holding acquired Volvo from Ford in 2010, has a joint venture with Mercedes, owns London Electric Vehicle Co as well as a majority stake in British carmaker Lotus. It has also helped rejuvenate Malaysian carmaker Proton, in which it bought a 49.9% stake in 2017. Earlier this year, Geely Auto’s electric brand Zeekr partnered with Waymo to develop an electric vehicle for Alphabet's subsidiary’s robotaxi fleet in the United States, the China Daily reports.

Geely Holding as a group sold over 2.2 million vehicles in 2021, with Volvo sales reaching 698,693 units globally and Geely Auto delivering 1.33 million units. Geely Auto is planning to launch 13 models this year, most of which will be hybrids and electric vehicles, which will help it to achieve a sales goal of 1.65 million units this year, up 24% from 2021.