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RENAULT is inking a joint venture with Chinese car giant Geely to expand sales into China and South Korea, but someone forgot to tell Alliance partner Nissan.

The move suggests that Renault is wanting to make its own way in China without Nissan, with two Nissan management leaders telling Reuters they were unaware that Renault was even in negotiations with Geely.

Renault and its global Alliance partner Nissan Motor Co once had the same Chinese partner Dongfeng, however the Renault-Dongfeng joint venture was dissolved.

The deal also appears to be designed to lift the Geely sub-brand Lynk&Co into the limelight from its five-year period of virtual obscurity – including Australia.

Renault already produces the Koleos and upcoming Arkana SUVs in right-hand drive at its Samsung factories in South Korea, and could use those factories as conduits to local Australian sales of Lynk&Co and Geely vehicles.

Renault linked hands with Geely this week, stating it wanted to revive its falling sales in China. It already has joint ventures with Brilliance China Automotive to make light-commercial vehicles, and with Jiangling Motors Corporation for future electric vehicles.

The French brand last year ended a joint venture with Dongfeng Motor Group that began in 2013. The venture built passenger cars for China but sales slumped to 18,607 units in 2019, a fraction of the factory capacity of 110,000 cars.

In 2019, the venture lost $US212 million, leading Renault to pull stumps and allow Dongfeng to take over its 50 per cent stake.

Now Renault plans to share technology and sales and marketing resources with Geely to introduce Renault-branded hybrid vehicles in China.

The vehicles would be hybrids from Geely’s sub-brand Lynk&Co and be built by Geely. This would kick-start Geely’s 2016 plans to create a global youth-centric car brand with a heavy bias to electrified power plants.

Reuters reported this week that Renault and Geely were considering making full electric vehicles together as well as the hybrids.

The French car-maker had earlier this year announced its long-term plans that include electrifying 65 per cent of its range by 2025.

Markets for the Geely-Renault tie-up will start with China and then add South Korea before looking at other Asian countries.

In South Korea, Renault’s 80 per cent-owned subsidiary Renault Samsung Motors (RSM) makes vehicles including the Australia-bound Koleos SUV and, from later this year, the Arkana coupe-SUV that replaces the Kadjar.

It is at this point that RSM, which is already kitted out for right-hand drive production, could be the production centre for Lynk&Co hybrids for Australia.

Volvo Australia managing director Stephen Connor said in March that he was very keen to get Lynk&Co here as a showroom partner to Volvo.

He said that the Chinese brand was “absolutely” coming to Australia but could not give a launch date or model availability.

Lynk&Co is yet to make a right-hand drive model and has indicated that the first RHD markets will be the UK and Malaysia (where Geely owns the RHD car-maker Proton) from 2022.

Lynk&Co currently makes four models and has two more close to production. All current models – the 01, 02, 03 and 04 – have the Volvo (another Geely company) CMA platform and drivetrains also used by the XC40 and the Polestar (yet another Geely company) 2.

The cooperation between Geely and Renault was announced this week but there was no input – or acknowledgement – by the Alliance, of which Renault is a one-third partner.

This could imply that the cracks in the Alliance mentioned by fugitive Alliance boss Carlos Ghosn, now secreted in Lebanon, are correct; leading to speculation that the deal between Nissan, Renault and Mitsubishi is unravelling. That could be the reason for Renault going it alone with Geely – to cement its future.

 

By Neil Dowling

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