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August 10, 2021

Geely will bolster Renault presence in China – analyst

After a poor track record, Renault now has an opportunity to break into the world's largest car market with the help of Geely - a willing partner for Renault and other OEMs.

By David Leggett

Renault should see a boost in China after announcing plans for a joint venture on hybrids with Geely, an analyst has told just-auto.

Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, points out that there are big potential manufacturing cost savings ahead for Renault. “The joint venture will see Renault-branded hybrid vehicles being sold in China, but manufactured using Geely’s facilities, supply chains and technologies,” he says. “This is a positive development for Renault, which has made repeated to break into the lucrative Chinese market but was not able to capture buyers’ attention in the country.

“After several failed attempts to crack the Chinese market for over 20 years, Renault finally planned to exit the market in April 2020 and cancel its existing joint venture with local carmaker Dongfeng. Slowdown in vehicle sales and disruptions created by the COVID-19 pandemic were behind the decision. However, the joint venture with the largest privately owned automaker in China may revitalize Renault’s position.”

The tie-up also comes with benefits for Geely, he says – it is no stranger to partnerships with others.

“For Geely, the joint venture will strengthen its role as a key powerbroker in the auto industry. The company has been aiming to expand its global reach and annual sales through partnership and/or acquisition of regional and/or global brands to enter new regions. Geely will rely on Renault Samsung Motors two-decade long presence in the South Korean market and localize Geely’s Lynk & Co’s energy-efficient vehicle platforms for local market.

“Geely’s most significant brands, joint ventures and OEM relationships include Volvo Cars, Polestar, Proton, Lotus, LEVC, Daimler, Smart, Volvo Trucks and now Renault.

“Global partnerships between automakers to leverage each other’s regional strength have proved to be a win-win in many cases and are now a preferred path for better bottom-line. The latest agreement is in line with Renault’s new strategic priorities ‘Renaulution Plan’ – as termed by the company and announced in early 2021, which aims at focusing on the Asian market. This includes a commitment to re-enter the Chinese market, but rather cautiously. The partnership with Geely presents Renault lesser risk than going alone.”

Renault and Geely sign MoU for hybrid vehicle production

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