Carmakers Geely and Renault will begin building vehicles in South Korea, as the Chinese group expands its global web of partnerships further, and the French company seeks a stronger hold in the Asian markets traditionally dominated by alliance partner Nissan.
Under the deal, Geely will supply its manufacturing systems to Renault, which will build new hybrid and traditional engine vehicles at its South Korean facility for the domestic and overseas markets.
The deal, which follows a memorandum of understanding in August, is the most significant example of the groups working together after Renault’s electric Alpine brand signed a development deal with the UK’s Lotus, controlled by Geely.
It is a further expansion for Geely, which also owns Sweden’s Volvo Cars and has built stakes or partnerships with other leading groups including Germany’s Mercedes-Benz and Volvo Trucks.
For Renault, it is an attempt to carve out a market in Asia, particularly China, where its Japanese partner Nissan is dominant as part of a formal strategy where each alliance company, which includes Mitsubishi, has an area of the world where it leads.
Renault has underperformed in China, the world’s largest market that also provides carmakers from Volkswagen to General Motors with important profit pools.
The alliance between the three carmakers, which has faced questions over its long-term survival since former leader Carlos Ghosn left the businesses after his 2018 arrest, is due to issue an update on the group next Thursday.
Under the Geely deal, the new models will be produced at the Renault-Samsung facility in Busan, South Korea, from 2024. They would increase the companies’ “penetration in the Asian hybrid vehicle markets”, the groups said.
For Renault, it also marks part of chief executive Luca de Meo’s turnround strategy as he aims to upgrade its South Korean operations by partnering with others in the industry.
“We are happy to initiate such an innovative partnership with Geely Group, which has an impressive record in the automotive industry,” de Meo said.
“Geely has a proven record in creating mutually beneficial collaborations that focus on technology, experience and shared ideas with the ultimate goal of creating higher quality, more sustainable products,” said Geely chair Eric Li, also known as Li Shufu.
“We are looking forward to working with Renault and realising new synergies that combine strengths from both parties to create value for the end user.”