Paris/Shanghai (Reuters) – French Automaker Renault and Chinese partner Geely plans to announce a deal later this month on expanding their collaboration to Brazil, three sources said, as they seek new growth markets in the midst of expanding world trade wars – wide.
Both companies created a thermal engine joint venture last year and since then they also started selling cars produced at a joint -owned factory in South Korea.
They are now planning to expand their partnership further to Brazil, and are working on a preliminary deal that they aim to publish later this month, the sources are familiar with the issue. They refused to be named as the conversations are not yet public.
Under the deal, the Chinese company would start using the Brazil Renault retail network as early as this year to start selling Geely branded vehicles exported from China, two sources said.
The deal would also see Geely taking a minority stake in Brazil Renault and using the Curitiba plant the latter to assemble vehicles there, both sources said. It was not immediately clear how large the investment would be.
Renault and Geely refused to comment. The plan was not previously reported to build its presence in Brazil by selling cars exported through Renault Retail Network. Earlier, Les Echos outlined their conversations on local investment and production.
The move will help boost capacity use at the Renault factory in Brazil, the French fifth foreign market, and coincides with its wider plan to reduce its dependence on the European market.
It would also help Geely, whose main export market in Europe, is expanding into new markets as he tackles at home bruising price competition and Hefty tariffs set by several advanced markets including the US, Canada and EU on vehicles made in China.
In the midst of increased trade and overcapacity tensions in China, Chinese automators have been exploring opportunities in markets such as Russia, South America, the Middle East and Africa for export growth.
Brazil was the fastest grew market for EVS and Hybrid Plug-in exports from China last year, with loads more than doubling to 152,000 units, according to Cui Dongshu, Secretary General of the China Traveler Car Association.
He also became the second largest market for new Chinese energy vehicles – which include electricity and hybrid models – after Belgium, he said.
In Brazil, Geely would sell cars under his own brand, unlike the Korean Partnership currently focusing on one model with the Renault Brand, the Grand Koleos, built on Geely's platform and manufactured in a managed plant by Renault in Busan, South Korea.