An October 2018 file photo showing one of the automatic welding lines at Geely’s manufacturing base in Ningbo in eastern Zhejiang province. Photo: Xinhua
French carmaker Renault Group is returning to the mainland China’s passenger car market, the world’s largest, with a new partnership with Geely, more than a year after quitting a venture in Wuhan with a local rival.
Renault and privately-held Zhejiang Geely Holding Group – which owns Geely Auto, Volvo Cars and a stake in Daimler – agreed to share resources and technologies to focus on making hybrid vehicles for Asian markets, according to a statement on Monday. No other details were disclosed in the memorandum of understanding.
“In China, based on Geely Holding’s existing technologies and mature industrial footprint, both partners will jointly introduce Renault- branded hybrid vehicles,” the carmakers said in a joint statement on Monday. “Renault will contribute on branding strategy, channel and service development.”
The agreement marks Renault’s renewed effort to gain a foothold in the mainland market after quitting another venture, following months of Covid-19-related shutdowns to its venture in Wuhan. The carmaker sold its 50 per cent share to Dongfeng Motor in April 2020 to focus on producing light commercial vehicles and electric vehicles. Soh Weiming, a former top executive at Volkswagen, joined as China chief executive in March to lead Renault’s business makeover in China.
China, the world's biggest car market, aims to boost auto sales and add more charging facilities for electric vehicles this year. Photo: Bloomberg
China is the world’s largest passenger car market based on 19.7 million units sold in 2020, according to data compiled by IHS Markit. Sales of new-energy vehicles (NEVs) amounted to 6.3 per cent or 1.2 million units, and are expected to reach 2.2 million in 2021 and 6.1 million or 24 per cent of the market in 2025. UBS forecast it may reach 6.6 million in 2025.
NEVs comprise electric vehicles, plug-in hybrid EVs, and fuel cell electric vehicles, each taking 78.9 per cent, 21.1 per cent and less than 0.1 per cent the total NEV sales volume in 2020, according to IHS Markit.
“The signing paves the way for potential joint ventures between the two car companies and production of Renault-branded hybrid vehicles in China,” said Gao Shen, an independent analyst in Shanghai. “For Renault, Geely appears to be an ideal partner due to its leading position in the local market.”
Geely is controlled by Li Shufu, who ranked 26th in Forbes’ China Rich List in 2020. His current net worth is estimated at US$21 billion.
Li Shufu, the billionaire chairman of Zhejiang Geely Holding Group. Photo: Bloomberg
The new partnership with Renault added to his efforts to push into the NEV market as China pursues its carbon-neutrality goal by 2060. Earlier this year, Geely teamed up with Baidu and Foxconn to build smart EVs and launched its own smart EV brand Zeekr to compete with Tesla’s Shanghai-made Model 3s.
The agreement did not reveal the time frame for the venture or specific vehicle models to be developed by the two carmakers. Renault, based in Boulogne-Billancourt in western Paris, launched three extended hybrid cars from its Arkana, Captur and Megane models in May.
Renault Samsung Motors, the carmaker’s venture in South Korea, would explore localisation of vehicles based on Geely’s Lynk energy-efficient vehicle platforms for local markets, according to the statement.
Lynx & Co, a brand Geely co-developed with Volvo cars, sold more than 120,000 units in its first year after its launch in China in 2017. It ranked second after WEY among mass-market internal-combustion engine vehicles in the latest 2021 market study by JD Power.
This article appeared in the South China Morning Post print edition as: Renault eyes comeback with Geely deal
