Renault, Geely likely to form joint venture for producing hybrid vehicles

French automaker Renault and China's Geely Holding are likely to soon announce a joint venture to develop the latter's hybrid vehicles in South Korea, Reuters reported, citing sources. Both the parties might also look at the possibility of exporting duty-free cars to the US.

The joint venture, which is in the works since early this year, also involves joint operations in China. Renault, which exited China last year, will find its way back into the world's largest auto market. The partnership could help Renault shore up its struggling business in South Korea and broaden its presence in Asia.

Both Renault and Geely are expected to work on a new lineup of green cars that will use Geely's manufacturing facilities to be made and the carmaker's Compact Modular Architecture (CMA) - a midsize vehicle underbody structure shared by Geely and Volvo. Geely will also manage supply chains while Renault will focus on vehicle design, sales and marketing for the new brand in China, the report stated.

For Geely, the partnership will mean an access to Renault's assembly plant in South Korea as well as a foothold in the country where the latter has been making and selling cars for over two decades via its local brand with a Samsung Group unit. Geely plans to produce the Lynk & Co 01 sport-utility vehicle at Renault's plant in the southeastern South Korea, the report revealed.

With this, Geely aims to localise the production of certain Lynk hybrid vehicles in South Korea and would also line up local supply of parts. The Lynk & Co 01 model currently comes in three powertrain options - petrol, petrol-hybrid and plug-in electric hybrid. Further, Geely could take an advantage of South Korea's free-trade agreement with the US and export its Lynk & Co vehicles to the its auto market.