Chinese automaker Geely Automobile Holdings has just acquired 34.02% of Renault Korea Motors (RKM) for $207 million, as it doubles down on its partnership with the French automaker in South Korea. Incidentally, RKM recently made a corporate name change in March this year from its former Renault Samsung Motors (RSM) identity, dropping Samsung; which represented its partner Samsung Card which still holds a 19.9% stake in the company.
The new development follows a January agreement where Geely would loan (then) Renault Samsung Motors its compact module architecture (CMA) to build new HEV (hybrid electric vehicles) and ICE (internal combustion engine) models for the South Korean market with the possibility to export, as well. RKM's lineup presently consists of three locally produced models, the SM6 sedan, QM6, and SM3 SUVs; along with two import models, the Renault Master LCV (light commercial vehicle) and Zoe BEV (battery electric vehicle). The production agreement aims to increase the lineup by 2024.
The join press release of both partners states the following:
"This capital increase reflects strong confidence by Geely Holding Group and Renault Group in the South Korean market’s strong potential which will further enhance Renault Group’s “Renaulution plan”. Both companies are fully committed to Renault Korea Motors by introducing new product portfolio that will lead to greater market share in the South Korean domestic market whilst exploring export market opportunities."
We see more to this deal than what they offer at face value.
RKM's assembly plant in Busan has a 300,000 unit annual output capacity and with a South Korea-U.S. free trade agreement, the investment seems like a no-brainer for Geely as it potentially opens the door to one of the world's top automobile markets.
Geely also has a standing supply partnership with Alphabet's (Google) Waymo for its self-driven "robotaxis". The Busan plant could be a strategic facility given the fiscal incentives.
The new deal also adds a significant chunk to Renault's war chest for establishing its new EV arm that aims to against the likes of Tesla, as reported last month where the French automaker was also considering offloading a chunk of its stake in Japanese automaker Nissan.