Geely is the largest privately owned automaker in China. The company has been flexing its financial muscles over the last 10 years to expand its global reach and annual sales. One of the key strategies Geely is pursuing is either to partner with or acquire other automakers and brands to enter new regional markets. Now, Geely has added yet another string to its bow in the form of a joint venture with French carmaker Renault.
Renault has made repeated attempts to break into the lucrative Chinese market as sales there accelerated rapidly over the last 20 years. However, none of its strategic approaches in the country really captured buyers’ attention, which led to the company’s decision in April 2020 to abandon the market and cancel its existing joint venture with local carmaker Dongfeng. This decision also came at a time when vehicle sales in China had started to slow down after years of uninterrupted growth, and after the drastic short-term disruption wrought by the COVID-19 pandemic began to take effect.
However, a new CEO in the form of ex-SEAT boss Luca de Meo, combined with a new business plan announced at the start of 2021 dubbed the ‘Renaulution’, has injected some much-needed impetus into Renault’s plans for the Asian continent. Crucially, this includes a commitment to re-enter the Chinese market but – keen to avoid the same mistakes it made in the last 10 years – this time, Renault will compete in the market by leveraging the established strength of Geely.
Specifically, the joint venture will see Renault-branded hybrid vehicles sold in China, but manufactured using Geely’s facilities, supply chains and technologies. This represents less risk for Renault rather than deciding to go it alone – the company does not need to commit any effort or funds to building its own manufacturing footprint in China, and can get vehicles into customers’ hands more quickly thanks to an already established manufacturing and supply network.
In addition, the JV also covers vehicle strategy in South Korea. In this region, the two companies will look at localizing Geely’s Lynk & Co brand for the market. This will be led by Renault’s experience in South Korea, where it has more than 20 years of history selling Renault and Renault-Samsung-branded models.
For Geely, the new joint venture with Renault further cements its role as a key powerbroker in the auto industry. Its position as a large Chinese automaker makes it a desirable partner for non-Chinese automakers looking to set up joint ventures to take advantage of growing vehicle sales in the region. This has seen Geely completely acquire a number of global automotive brands, and set up some significant joint ventures with global OEMs (listed below).
Geely’s most significant brands, joint ventures and OEM relationships
- Legendary Swedish automaker with decades of experience
- Lacklustre sales and poor strategy from previous owner Ford had seen Volvo lose market position
- Deal reached in 2010 for Geely to buy Volvo from Ford
- Geely launched a multi-billion-dollar revival of Volvo, including a new platform and engine range
- Previously acted as a high-performance arm of Volvo Cars (akin to Mercedes AMG or Audi quattro)
- Now spun off by Geely as a separate brand, with strong focus on electrification
- Low-volume Polestar 1 launched in 2019 with Tesla-Model-3-rivalling Polestar 2 launching in 2021
- The largest automaker in Malaysia
- Geely bought a 49.9% stake in the company in 2017
- The company introduced the Proton X70 in 2019, which is based on the Geely Boyue
- Legendary British low-volume sports car manufacturer
- Before Geely’s ownership, Lotus was also owned by then-Proton-parent DRB Hicom
- With the sale of Proton, Geely also bought a 51% stake in Lotus
- Lotus is now looking to launch new models backed by funding from Geely
- This is likely to include a sporty SUV that will be based on a platform supplied by Geely
- Stands for London Electric Vehicle Company, was created from the former London Taxis International
- Coventry-based manufacturer of the latest plug-in-hybrid London ‘Black Cab’ taxi
- This has also spawned a commercial van variant called the VN5
- All models are based on a plug-in-hybrid powertrain using Geely components
- All versions use a 1.5-litre gasoline engine shared with Volvo and Lynk & Co vehicles
- Models are also built in Yiwu, China at a Geely-owned facility
- Large-scale German manufacturer of premium passenger and commercial vehicles
- In February 2018, Geely bought a $9 billion stake in Daimler, amounting to just less than 10%
- This makes Geely the largest single shareholder in the German company
- Tie up could see Geely benefit from Daimler’s specialist knowledge of electrified vehicles
- In addition, Daimler could gain more options to sell vehicles in China through Geely
- Initially, a city-car-focused brand from Daimler to help it address more segments
- However, poor strategy and product decisions saw it lose market share over the last decade
- Geely and Daimler agreed to enter joint 50/50 ownership of Smart from January 2020
- This would see Smart’s headquarters move to Hangzhou, China
- Geely will market Smart models in China, where small, affordable EVs are more popular
- A new SUV is due in 2022 that will use Geely’s SEA architecture
- Geely also has a tie up with Swedish truck maker Volvo Trucks (AB Volvo)
- AB Volvo split from Volvo Cars in 1999
- Geely bought a 14.9% stake in Volvo Trucks that completed in June 2018
- Deal adds to Geely’s global footprint
- Also brings specialized knowledge in electrification, autonomy and connectivity to Volvo Trucks
- Joint venture plans announced in August 2021
- Geely will gain Renault’s guidance in marketing Renault-branded models in China
- Will also get help in marketing models in South Korea, where Renault has experience
- Renault gains a valuable route into the lucrative Chinese market
- It also avoids having to establish its own supply and manufacturing footprint in the country