What’s in a company name? Branding experts will tell you that the naming process is crucial, of course, and perhaps there were a few billable hours on offer in thinking up the latest one for Renault in South Korea.
A decision has been taken: Renault Samsung Motors will now be known as Renault Korean Motors in a name-change designed to “solidify our identity as a domestic automaker with roots in the Korean market,” the company explained.
However, it seems that Renault has divided loyalties. Two months earlier it had signed a framework agreement with Geely to jointly develop hybrid cars at its Busan plant, using the Chinese group’s CMA (Compact Modular Architecture) platform. The first model is due for release in 2024.
The relationship deepened when China’s largest private car manufacturer purchased a 34.02% stake in Renault Korean Motors for W364 billion ($208 million) last week. Renault will remain the largest shareholder with 46.08%, while Samsung Card will keep its existing 19.9% stake.
The South Korean and Chinese media view the match as advantageous for all parties. Renault is probably looking at the deal as part of a wider revamp of its strategy in China, says Bloomberg, where it works more closely with Geely, despite existing ties to Nissan in the world’s largest automobile market.
Professor Kim Pil-su from Daelim University told South Korean newspaper Hani that Geely will see the tie-up as a conduit for exports to the US through the KORUS free trade agreement. “It’s very difficult for Geely to penetrate global markets via Beijing’s Made in China strategy, so it’s using joint ventures to access advanced markets like Europe and the US instead,” he explained. “There’s already one successful example: the Polestar electric brand, which is a JV with Volvo.”
Auto sector journalists speculate that the Busan plant could also be used to make electric robo-taxis for General Motor’s Maymo, as Geely has an existing supply agreement with the US group.
China Southern Net News was also impressed by the dealmaking, describing it as another case of Geely’s ‘Going Global’ strategy.
The company would be an excellent partner for Renault, it added, because it already has experience of working with international brands such as Volvo, Daimler, Lotus and Proton.
Geely “is just as good at forging partnerships as it is at buying, buying, buying,” agreed China Economic Net, which thinks the deal should also give Renault a much-needed boost in the Korean market, where it is “in urgent need of fresh blood to inject some momentum”.
At its peak in 2017, the Busan plant was running close to capacity in making 300,000 vehicles a year. But sales have been sliding. Last year Renault Samsung Motors, as it was then still called, sold 57,480 cars in the country, down 36% year-on-year.
South Korea’s Chosun news site offered a note of caution on the announcement, however, in asking whether the joint venture will make cars that appeal to Korean consumers. “It’s questionable,” the newspaper argued. “Geely’s brand is strongly associated with second and third tier cities in China. It’s a cost-effective choice, yes, but does that hold appeal here?”
The history of the Busan factory reflects the fluctuating economic circumstances of the wider region. In its first incarnation, the plant was a platform for the ever-expanding Samsung during the 1990s. Samsung chairman Lee Kun-hee (son of founder Lee Byung-Chull) laid the foundation stone in 1994 and the factory had started to produce cars by 1998, just as the Asian Financial Crisis was flattening the Korean economy.
Samsung Motors was one of the many victims of the financial and economic devastation, paving the way for the factory’s reinvention as a platform for Renault’s overseas expansion.
Now the plant is getting another new act, this time with a partner from China. Geely has also forged a joint venture with South Korea’s Myoung Shin group to make electric trucks at the latter’s Gunsan plant. This plant also had a former foreign owner, General Motors Korea, which snapped it up from Daewoo Motors after the Korean carmaker collapsed during the Asian Financial Crisis.
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