Geely buys stake in Renault’s Korea Motors unit
10 May 2022
Renault Group is planning to sell around a third of its Renault Korea Motors unit to Geely, China’s largest privately-owned automotive group. The two companies entered into a share-subscription and joint-venture agreement.
Renault emphasised it would remain the majority shareholder in Renault Korea Motors, with Geely holding 34.02% of the South Korean unit once the deal has been completed. It has been reported that Geely would pay around $200 million (€190 million) through a capital increase, which Renault has confirmed with Autovista24.
The move could help Renault focus on its key markets, as well as freeing up capital for its electric-vehicle (EV) business. The French carmaker currently holds around 80% of Renault Korea Motors. The second-largest shareholder was Samsung Card, with 20%, but the company announced it would sell off its shares in December 2021.
Renault told Autovista24 that the deal would support plans to explore overseas export sales. However, an initial focus will be on the South Korean market, the company said.
For Volvo’s parent company Geely, a lucrative export market would be the US, as the carmaker could take advantage of South Korea’s free-trade agreement with the country. The Chinese manufacturer is known for growing its global market presence through partnerships.
The deal would also help Geely gain traction in South Korea, where Hyundai and Kia remain dominant. A stake in Renault Korea Motors could also allow Geely better access to South Korean EV batteries.
‘Geely Auto’s decision to acquire a stake in Renault Korea Motors means that it would actively engage and increase synergy in building new models based on the potential in the Korean market,’ Renault Korea Motors CEO Stephane Deblaise told the Korean Herald.
Growing market share
Both companies are eager to increase their market share in South Korea and abroad, with the deal opening up new opportunities to diversify model lineups.
‘This capital increase reflects strong confidence by Geely and Renault Group in the South Korean market’s strong potential, which will further enhance Renault Group’s “Renaulution plan.” Both companies are fully committed to Renault Korea Motors by introducing a new product portfolio,’ stated Renault.
The news comes months after Geely and Renault announced a collaboration focused on bringing an all-new vehicle lineup of hybrid and internal-combustion engine (ICE) powered models to the South Korean market. These cars will be produced at Renault’s Korean site in Busan, with mass production expected to launch in 2024.
Busan is Renault’s largest site in Asia. The facility has a total production capacity of 300,000 vehicles a year. Cars there are primarily built for the local market although a proportion is now also destined for sales abroad. Geely has become a strategic partner for Renault in Korea. The vehicles produced in the country will rely on Geely’s advanced hybrid-powertrain technologies.
The deal follows speculation that Renault, the largest shareholder in Nissan Motor, might reduce its stake in the Japanese carmaker as part of plans to separate its EV business.