China’s National Development and Reform Commission has approved a joint venture between Renault and Dongfeng Motor Group aimed at building and selling cars in the country. The 50-50 venture – to be known as Dongfeng Renault Automotive -- is expected to produce 150,000 vehicles annually and is also expected to build and assemble engines.
The venture will also consider producing key engine components. Renault said in a statement that the venture will help it boost its scale in the Chinese market.
A Chinese media report said in July that the joint venture plans to commence producing SUVs and minivans in 2014. The CHY7.76 billion ($1.3 billion) venture was announced by Renault in 2012 along with plans to build its own cars in China.
Renault currently sells about 50 percent of its offerings in Europe and aims to cut its dependence on the region. Renault seems late in entering China compared to rivals Volkswagen and PSA/Peugeot-Citroen.
Since imported vehicles are imposed with a 25 percent tariff, producing locally would be the next viable option to compete in China.
Renault has sold fewer than 30,000 units in China this year, compared to over 1 million vehicles sold by Japanese partner Nissan. Fellow French carmaker and rival PSA currently operates a joint venture with Dongfeng in China and is holding talks for the Chinese carmaker to take holdings in PSA.