Renault to create Chinese joint venture with Dongfeng Motor Group

Article by Anita Panait, on November 27, 2012

Renault is planning to create a joint venture Dongfeng Motor Group to produce cars in China, according to China Business News, citing unnamed sources at the country's second-largest carmaker. Renault and Dongfeng are planning to invest a shared CHY6.5 billion ($1 billion) in a plant in Hubei, China that will have an initial output capacity of around 200,000 cars a year, the sources told China Business News.

Renault is currently one of the few foreign carmakers that do not build products in China. The French carmaker posted a 65-percent increase in sales in China to 24,275 cars in 2011.

China Business News quoted Chen Guozhang, chief executive of Renault Greater China, as saying that the joint venture would operate a plant formerly used by the French carmaker when it had a domestic partner in the country in the mid-1990s.

Chen was also quoted as saying that Renault would not need to seek a new production license from the Chinese government, as it could use the one from the prior venture.

Dongfeng is also operating ventures with French carmaker PSA/Peugeot-Citroen and Japanese automakers Nissan and Honda. Foreign carmakers seeking to build vehicle in China are required to operate via a joint venture with a local company.

Renault momentarily built cars in China in a venture with a little-known state-owned producer of special purpose vehicles.

Renault is trying to penetrate emerging markets where vehicle demand remains strong in order to cope with dwindling sales in Europe.

For 2012, Renault expects its deliveries outside Europe to account for around half of its sales, ahead of its target set for 2016. In a report, La Tribune said that Renault is planning to introduce two low-cost vehicles, including a Tata Nano challenger, in India at the end of 2014.

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