French automaker Renault said it will sell a stake in its Korean arm to China’s Geely Automobile Holdings for about $200 million.
The move to sell a 34% stake in Renault Korea Motors for 264 billion won ($207 million) will free up funds for Renault, which is planning to boost profit margins and split its electric vehicle (EV) and combustion engine businesses amid intense competition in the landmark switch to cleaner cars.
The news comes weeks after media reports that Renault, the top shareholder in Nissan Motor, may lower its stake in the Japanese company.
For Geely, which has typically grown its business through global partnerships, it buys a foothold in the South Korean auto market, which is dominated by local champions Hyundai Motor and Kia Corp.
Korea has been difficult to crack for other automakers, including General Motors and SsangYong Motor, now owned by India’s Mahindra and Mahindra.
It also gets Geely closer to three important EV battery makers in South Korea: LG Energy Solution (LGES), SK Innovation unit SK On and Samsung SDI.
Geely Eyes Korean EV market
“It’s a partnership, and Geely might be knocking on the door of the South Korean EV market,” said Kim Jin-woo, an analyst at Korea Investment & Securities.
“For Chinese firms, building a successful track record in South Korea can help sell EVs in other emerging markets, as well as Europe and US, which the firms continue to knock the door of, but they are difficult markets,” Kim added.
Geely – which owns Volvo Cars and a 9.7% stake in Daimler AG – and Renault announced a partnership in January to develop hybrid vehicles for the South Korean market and abroad, produced at Renault’s factory in Busan.
Renault Korea Motors will issue 45.4 million shares at 5,818 won per share to Geely’s unit, Centurion Industries Ltd, the two companies said in a statement on Tuesday.
Renault, whose sales fell for a third straight year in 2021, owned 80% of the unit at the end of last year. The rest was owned by credit card company Samsung Card, which said in December that it intended to sell its stake in the unit but that no details had been decided.
- Reuters with additional editing by Sean OMeara
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