South Korean automakers, particularly mid-tier companies, are turning to Chinese automotive firms for collaborative opportunities. These partnerships aim to jointly develop vehicles, outsource manufacturing, and even establish battery assembly plants in S. Korea.
Companies like KG Mobility (formerly SsangYong Motor) and Renault Korea, which once held over 30% of the domestic market but now see figures around 10%, are seeking ways to regain market share, boost revenue, and stay competitive by tapping into the growing influence of Chinese automakers.
On Oct. 21, KG Mobility announced a new SUV developed in collaboration with Chery Automobile. Rather than bearing the massive expense of creating a new platform—which would cost millions of dollars to develop core components like the chassis, engine, and suspension—KG Mobility will license Chery’s existing platform as a more economical solution.
KG Mobility previously partnered with BYD in November of last year to co-develop a hybrid system for its upcoming models, with plans to set up a BYD battery assembly plant in S. Korea. Separately, Renault Korea also joined forces with China’s Geely Group to launch a new model this fall.
Industry experts note that, as the global automotive industry faces intense competition during the transition to future vehicle technologies, mid-tier Korean automakers are turning to partnerships with Chinese companies in hopes of regaining competitiveness and turning the tide. Among S. Korea’s five automakers, the three mid-tier companies—KG Mobility, Renault Korea, and GM Korea—have seen performance steadily decline over the past few years, while Hyundai and Kia have remained relatively strong.
According to data from Carisyou, an automotive research institute, the combined market share of the three midsize players—KG Mobility, Renault Korea, and GM Korea—fell to 8.3% in Q3, dropping below 10% for the first time, down from about 20% five years ago. While GM Korea relies heavily on exports, KG Mobility and Renault Korea face tougher challenges due to their dependence on the domestic market, where sales have been slow. After returning to profitability last year, KG Mobility posted an operating loss of around 40 billion won ($28.5 million) in Q3 of this year.
Additionally, high interest rates, inflation, and a stagnant domestic market make it difficult for these companies to launch new vehicles on their own, especially when it comes to EV and hybrid technology. While global players shift focus between electric vehicles (EVs) and hybrids based on market demands, the mid-tier Korean automakers face a challenging gap to keep up. By collaborating with Chinese firms known for cost efficiency and technological prowess, these companies are hoping to close that gap.
KG Mobility’s decision to use Chery’s plug-in hybrid (PHEV) platform highlights this shift, marking the first major platform partnership since its 1997 venture with Mercedes-Benz for the Chairman model. The company plans to release a hybrid vehicle co-developed with BYD next year, while Renault Korea’s latest model, the Grand Koleos, utilizes a platform developed by Geely’s Swedish R&D center and incorporates Volvo and Renault Group’s hybrid technology.
Moreover, these partnerships with Chinese automakers are expanding in scope and taking on new forms. KG Mobility signed an agreement with BYD to establish a battery assembly plant on its Changwon site In Nov. 2023, leveraging BYD batteries already used in its Torres EVX. Additionally, starting next year, Renault Korea’s Busan plant will produce Polestar electric vehicles under Geely’s direction.
While skepticism about Chinese collaboration once prevailed in South Korea, consumer attitudes appear to be shifting. The Grand Koleos, for example, saw strong sales in October with 5,385 units sold—a 38% increase from September, placing it as a notable competitor to the Kia Sorento and Hyundai Santa Fe. As the model is priced at around $24,900, slightly lower than its rivals, the Koleos is winning over customers with its affordability. Despite initial concerns about its Chinese affiliations, price competitiveness has proven to be a strong factor for consumers.
Lee Hang-koo, president of the Jeonbuk Institute of Automotive Convergence Technology (JIAT), stressed that “these partnerships present valuable opportunities for Korean automakers to learn and grow. However, it’s crucial for them to stay in control and not lose their strategic edge in the process.”
