Photo: Renault Brilliance
Renault is having a hard time establishing itself in China. First, it sold its joint venture with Dongfeng Motor in April 2020 because it was losing money. The company’s second joint venture, with Brilliance Auto, also failed to deliver good results. Yicai Global informed that it filed for bankruptcy.
A week ago, the joint venture was failing to pay its staff’s salaries, which clearly indicated something very wrong was happening to the company. It was expected: Brilliance Auto said it could no longer pay its bills in November. The Chinese carmaker has a debt of RMB52.4 billion ($8.2 billion) that was sure to affect its other businesses, such as the Renault Brilliance alliance. Curiously, the company only sold vans with the Jinbei brand.
For a company that is struggling to get back to black as Renault, that is a significant blow. China is the world’s most important car market, and it is an important revenue source for the companies that managed to crack a good presence there, such as General Motors and the Volkswagen Group. The German carmaker recently named Ralf Brandstätter as its new CEO and board member for that country, which shows how crucial those operations are.
If Renault got that right, it would help it meet profits again and invest more money in its Renaulution electrification plan. The answer for those needs may be in the company’s alliance with Geely, which we talked about on August 9.
Many of the aspects of this alliance only got more clear on December 21. While Renault will seize Geely’s factories in China to produce plug-in hybrids for that market, Geely will use the Renault-Samsung factory in South Korea to export Lynk & Co cars to the U.S. without taxes. In other words, Geely will grant Renault access to the Chinese market, and Renault will help it increase its presence in the American market.
As we said in August, it is a win-win deal that will probably make Renault feel no sorrow for waving Brilliance Auto bye-bye. It will all depend on execution, something that Renault failed to deliver twice in the largest car market in the world. Hopefully, the third time’s the charm.
For a company that is struggling to get back to black as Renault, that is a significant blow. China is the world’s most important car market, and it is an important revenue source for the companies that managed to crack a good presence there, such as General Motors and the Volkswagen Group. The German carmaker recently named Ralf Brandstätter as its new CEO and board member for that country, which shows how crucial those operations are.
If Renault got that right, it would help it meet profits again and invest more money in its Renaulution electrification plan. The answer for those needs may be in the company’s alliance with Geely, which we talked about on August 9.
Many of the aspects of this alliance only got more clear on December 21. While Renault will seize Geely’s factories in China to produce plug-in hybrids for that market, Geely will use the Renault-Samsung factory in South Korea to export Lynk & Co cars to the U.S. without taxes. In other words, Geely will grant Renault access to the Chinese market, and Renault will help it increase its presence in the American market.
As we said in August, it is a win-win deal that will probably make Renault feel no sorrow for waving Brilliance Auto bye-bye. It will all depend on execution, something that Renault failed to deliver twice in the largest car market in the world. Hopefully, the third time’s the charm.
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