Renault moves to boost South Korea business with Geely tie-up

PARIS – Renault Group has moved to bolster its struggling South Korea operations, formally signing a deal with Zhejiang Geely Holding Group to design and build hybrid and internal-combustion vehicles for the local market and export. 

The new cars, based on Geely's Compact Modular Architecture, or CMA, as well as its hybrid powertrain and other technologies, will be built at the Renault-Samsung facility in Busan, with production to begin in 2024.

The agreement is Geely’s latest tie-up with a European automaker. Renault and Geely will also collaborate in China, after Renault dissolved its main joint venture there with Dongfeng.

"This collaboration marks a further step in efforts by the two automobile groups in producing low-emission models, as well as increasing their penetration in the Asian HEV markets," the companies said in a statement on Friday, referring to gasoline-electric hybrid vehicle technology.

Geely Holding, led by Li Shufu, is the parent company of Volvo Car Group, including electric-only Polestar; subscription-focused Lynk & CO; Lotus Group; Smart Automobile; and the London Electric Vehicle Company. It also has a nearly 10 percent stake in Daimler.

The CMA architecture underpins Volvo’s XC40 and C40; Lynk & CO’s 01 and other models sold in China; the Polestar 2; and an array of Geely-branded vehicles in China. It can accommodate internal-combustion, full- or plug-in hybrid and full-electric drivetrains.

Geely says nearly 1.3 million CMA vehicles have been sold.

For Renault, the joint-venture deal, in the works since last year, will allow its struggling South Korean unit to strengthen its product lineup and expand its market.

Renault has been making and selling cars in South Korea, largely based on European models, for over two decades via Renault-Samsung Motors, a local brand with a Samsung Group unit. Renault has an 80 percent share in the company.

A number of vehicles built at the Busan factory have been exported to Europe. Among them are the Renault Arkana, a coupe-styled compact SUV as well as the Koleos midsize SUV.

Renault-Samsung Motors’ sales have declined in recent years. Last year the brand sold 57,480 cars, a drop of 36 percent from 2020.

Reuters reported last month that Geely and Renault were set to announce a deal to jointly produce Geely's hybrid vehicles in South Korea, looking at possibly exporting Lynk & CO cars duty-free to the U.S.

Reuters contributed to this report