Renault will once again compete in the Chinese market by partnering with Geely, a brand that will produce hybrid cars in the Asian country.
Renault will return to the Chinese market thanks to a strategic partnership with the Geely Group (Volvo, Polestar, Geely, Lynk & Co). This news was announced by the French brand, which confirmed that both companies had signed an agreement to start this partnership, through which gasoline hybrid cars will be produced and sold in China with the Renault logo. These vehicles will be assembled at Geely plants and incorporate technology from the Chinese group, while the French firm will handle sales and marketing.
As part of this partnership, the two companies also agreed to explore the possibility of Geely producing Lynk & Co.- branded hybrid vehicles at Renault's factory in Busan, South Korea. As explained, this strategic partnership will focus mainly on China and South Korea, although it could expand to other Asian markets. Furthermore, the brands will also explore the possibility of developing 100% electric cars in the future.
Geely, the manufacturer that sells the most electric cars in China, already signed a similar agreement with Daimler in 2019 to make the Smart brand electric cars from 2022. Although the two arrangements have nothing to do with each other, they confirm the Chinese carmaker's strategy of creating partnerships to develop electric cars by sharing technologies and saving costs.
This agreement will mean Renault's return to China after it ended in 2020 upon the termination of its contract with Dongfeng Motor Group. It should be remembered that foreign car brands can only operate in the largest market in the world if they partner with local firms. Only Tesla is exempt from the measure after a compromise with the Chinese government led by President Xi Jinping.
This news somehow contrasts with the plans of the Renault-Nissan-Mitsubishi Alliance for the future, which sought a distribution of technologies and segments by continents and brands, which they called the "leader-follower" model. As a result of this plan, Renault had to lead Europe, Russia, South America and North Africa, while Nissan was left with North America, China and Japan. However, Nissan has yet to comment on the deal that would put Renault back on the Chinese game board. Autonews cite internal sources that assure that they discuss this move with Renault and the possible benefits of this strategic partnership.
For Renault, the benefits are clear: to return to the most important market in the world, lower costs of development and production of hybrid cars, and boost its factory in Busan, which was closed due to a low production rate. The new global strategy of the Alliance served, according to its brands, to bury the "Ghosn" scandal, which exploded when Carlos Ghosn, former president of the Alliance and its brands, was arrested and imprisoned for a time for various financial crimes. However, the Renault Group is strengthening itself thanks to the reformulation of its group strategy, presented at the beginning of the year by Luca de Meo, president of the same since 2020, and now presenting this agreement. In 2019, Renault was on the verge of merging with the PSA Group, a move that was finally dropped and ended with PSA joining the FCA Group forming Stellantis manufacturing corporation. A few messages of solidarity have been published from the three brands of the Alliance.
For Nissan, the most obvious benefit goes through the Busan factory. Renault Samsung Motors, the company under which the diamond firm operates in the Asian country, produced Nissan cars in Busan for export and for the local market. However, Nissan stopped making the Rogue SUV at the factory and in 2020 announced its exit from South Korea due to the inability to compete with Kia and Hyundai, which share 70% of the country's market share. This pact with Geely guarantees the continuity of the plant. However, it is unknown if the agreement between Renault and Nissan could benefit the latter in its Chinese project. Until now, Renault only collaborated with Dongfeng Motor Group, while other firms, such as the Volkswagen Group or Toyota, work with two local companies simultaneously.
While Nissan has not said anything about this matter, Autonews points out, citing sources close to Makoto Uchida, its CEO, that it should not negatively affect their relationship. @via Electric Hunter.
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