Renault will build its sports utility vehicles at the site of its joint venture with Dongfeng Motor Group with an eye to sell locally made vehicles in China by 2016. Renault and Dongfeng have already inked the CHY7.76 billion ($1.28 billion) partnership agreement in Wuhan, China. Renault and Dongfeng will also cooperate with Nissan as part of a "golden triangle" to gain synergies in costs and technology.
Renault and Nissan are in an alliance while the Japanese carmaker has a production deal with Dongfeng. The joint venture site can initially produce 150,000 vehicles annually, which could be doubled in the near future, Renault said in a statement.
However, by the time Renault sells its China-made vehicles in the first half of 2016, it would have been already so behind Volkswagen, General Motors and Toyota.
"If you look at the market, who needs Renault in China, to be blunt," Philippe Houchois, an auto analyst with UBS, told Bloomberg. He remarked that it is strategically “very hard” for a carmaker to “ignore a third of the global market."
French carmakers currently have the weakest presence in China, only accounting for 3.1 percent of the passenger-vehicle market share in the first 11 months of 2013, according to the state-backed China Association of Automobiles Manufacturers.
Renault-Nissan chief executive Carlos Ghosn, however, remarked that the issue is not whether it is “arriving late or soon.” The problem is its readiness. For Renault, the decision to commence production in China is part of its plans to cut its dependence on Europe.