Geely Automobile Holdings Acquires 34% Stake in Renault Korea
Both Companies Aim to Launch New Cars in Korea Based on CMA Platform
Joint Models to Maximize Synergy of Both Companies' Competitiveness
[Asia Economy Reporter Choi Dae-yeol] Geely Group, China’s largest private automobile company, has established a foothold for entering the Korean market by becoming a major shareholder of Renault Korea Motors. As Renault and Geely jointly develop eco-friendly vehicles, they appear to be strengthening their cooperation through Renault Korea.
According to Renault Korea on the 10th, Geely Automobile Holdings, a subsidiary of Geely Group, has agreed to acquire 34.02% of Renault Korea’s shares. Even after Geely Group becomes a major shareholder of Renault Korea, Renault Group, the current largest shareholder, will maintain its status with a stake exceeding 50%.
Although specific details of the share transaction have not been disclosed, Renault Group previously held more than 80% of Renault Korea’s shares. Considering that Renault Group will still hold over 50% after the transaction, it is estimated that part of the 19.90% stake held by Samsung Card, an existing shareholder and partner, will be sold to Geely.
Renault and Geely have cooperated in various ways to develop eco-friendly vehicles such as electric and hybrid cars. A representative example is the plan to develop new eco-friendly vehicles based on the CMA platform, acquired by Geely from Sweden’s Volvo, and produce them at Renault Korea’s Busan plant. The CMA platform was developed at Volvo’s Swedish research and development (R&D) center and has been applied to recently launched domestic models such as the Volvo electric car C40 Recharge. It can be used for eco-friendly vehicles including electric and hybrid cars as well as internal combustion engine vehicles.
Renault and Geely are developing a new vehicle using this platform, targeting a launch in Korea in 2024. The work is divided such that Renault Group handles vehicle design using Geely’s new platform, while Renault Korea’s researchers develop advanced features tailored to domestic demand.
Stefan de Vries, CEO of Renault Korea, said, “This decision to participate in the shareholding signifies a commitment to actively cooperate in developing joint models with Renault Korea based on the high potential of the Korean market, aiming to maximize synergy effects. We will also make self-driven efforts to successfully prepare joint models between Renault and Geely.”
Geely, which started as a refrigerator and motorcycle manufacturer, entered the automobile business in earnest in the 2000s and rapidly expanded its business. It was supported by strong domestic demand. While most complete vehicle manufacturers in China are state-owned or joint ventures with global automakers, Geely is a private company. Geely is praised for revitalizing the declining brand image of Volvo, which it acquired in 2010, by guaranteeing independent management activities such as research and development and marketing.
Geely owns the British high-performance car brand Lotus and the German compact car brand Smart as subsidiaries, and is also the second-largest shareholder of Daimler, the parent company of Mercedes-Benz, a German luxury brand and a starting point of the modern automobile industry.
The compact SUV XM3, led in development by Renault Korea, is waiting at the dock for export shipment. This is the second time a Chinese company has become a major shareholder of a Korean automobile company, following Shanghai Automotive’s acquisition of SsangYong Motor in 2004. Shanghai Automotive sold SsangYong Motor and left Korea after about four years. Geely is accelerating its entry into the Korean market by recently agreeing to build an electric truck production plant in Korea together with the Korean auto parts company Myungshin.
With this acquisition of Renault Korea shares, Geely has expressed its intention to directly compete in the passenger car market following commercial vehicles. The industry expects that if Geely’s electric vehicle manufacturing competitiveness and Renault Korea’s software strengths are organically combined, they will generate significant synergy.
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