PARIS/SHANGHAI (Reuters) – French automaker Renault and its Chinese partner Geely plan to announce a deal later this month on expanding their cooperation to Brazil, three sources said, as they seek new growth markets amid broadening global trade wars.
The two firms created a thermal engine joint venture last year and have since also started selling cars produced in a jointly owned factory in South Korea.
They are now planning to further expand their partnership to Brazil, and are working on a preliminary deal that they aim to announce later this month, the sources familiar with the matter said. They declined to be named as the talks are not public yet.
Under the deal, the Chinese firm would start using Renault’s Brazilian retail network as early as this year to begin sales of Geely-branded vehicles exported from China, two of the sources said.
The deal would also see Geely taking a minority stake in Renault Brazil and using the latter’s Curitiba plant to assemble vehicles there, the two sources said. It was not immediately clear how big the potential investment would be.
Renault and Geely declined to comment. The plan for Geely to build its presence in Brazil by selling exported cars via Renault’s retail network has not previously been reported. Les Echos had earlier outlined their talks on investment and local production.
The move will help boost capacity usage at Renault’s plant in Brazil, the French firm’s fifth largest overseas market, and aligns with its broader plan to reduce its reliance on the European market.
It would also help Geely, whose main export market is Europe, expand into new markets as it grapples with bruising price competition at home and hefty tariffs imposed by several developed markets including the U.S., Canada and the EU on China-made vehicles.
Amid rising trade tensions and overcapacity in China, Chinese automakers have been exploring opportunities in markets such as Russia, South America, the Middle East and Africa for export growth.
Brazil was the fastest-growing market for exports of EVs and plug-in hybrids from China last year, with shipments more than doubling to 152,000 units, according to Cui Dongshu, secretary general of the China Passenger Car Association.
It also became the second largest market for Chinese new energy vehicles – which include electric and hybrid models – after Belgium, he said.
In Brazil, Geely would sell cars under its own brand, unlike in the Korean partnership which currently focuses on a single Renault-branded model, the Grand Koleos, built on Geely’s platform and manufactured in a Renault-controlled plant in Busan, South Korea.
Technical details of the partnership in Brazil are still being considered, and one of the sources said that Geely could set up its multi-energy platform in the Renault plant to manufacture gasoline cars, hybrid cars and pure EVs.
(Reporting by Gilles Guillaume in Paris and Zhang Yan in Shanghai; Editing by Miyoung Kim and Jan Harvey)
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