Renault Plans To Build Cars In China From 2016
|   Monday, December 30, 2013
Renault announced a joint venture partnership in China with those from Dongfeng. The French will produce cars in Wuhan, according to the joint venture project with a 50 : 50 share, which means an investment of 870 million euros and a capacity of 150,000 units per year. The partnership has already received the approval of the National Development and Reform Commission from China, so Carlos Ghosn, President and CEO of Renault can consider himself the ally of Xu Ping, President of Dongfeng Motor.


In the future, the production capacity of the plant achieved ​​by the two partners could be doubled, according to representatives of the French brand.
Renault has 92 dealerships in China, but wants to increase its network to 120 branches by 2016, when it will start the marketing of models produced in Wuhan City, Hubei Province. The partnership joint venture between Renault and Dongfeng will create 2,000 new jobs in China and benefits for both parties at research and development level, as well as design and innovation.

Regarding the current presence of Renault in China, the French are expected to achieve cumulative sales of 30,000 units in the Land of the Great Wall for 2013. Dongfeng has sold over 3,078,500 units in 2012, according to brand representatives in the official press release, reminding that they are the second largest brand in the Chinese market.

Meanwhile, folks from PSA Peugeot Citroen hoped that Dongfeng would buy 30 percent of their shares too, because Dongfeng Motors is the main partner of the French group in China. PSA operates three plants in the land of the Great Wall with Dongfeng Motor. When speculations first appeared concerning the Dongfeng acquisition, the Chinese company's representatives said that talks are still in the investigative stage, and a final decision was not taken due to the compatibility problem with the PSA partner in Europe, General Motors, which had a partner in China, a Dongfeng rival. From then until now, GM has given up its stake within the PSA Peugeot-Citroen alliance.

Renault CEO Carlos Ghosn labeled the project as a "strategic alliance". He believes there are many opportunities in China, including the development of EVs.
"China has the biggest growth potential in the world," he said. "Dongfeng has paramount knowledge of the Chinese market."

"This project is about exploring new frontiers. The challenge is big but we are ready and well-prepared."
Compared to other names, like Volkswagen, General Motors and Toyota, which are present in the Chinese market for more than a decade, the French from Renault are late to the party, but they will try to occupy a larger share of the market.

"Arriving late or soon is not the issue," said Ghosn. "Are you ready? That's the issue."
Overall, Renault will likely debut on the Chinese market at a disadvantage, according to Sascha Gommel, a Frankfurt-based analyst at Commerzbank, even if they have an alliance with Nissan. "It will be tough to gain market share because you have now a market where almost every manufacturer is active," he stated. "You have growth rates that are much lower than in the past and consumers that don't know your brand. So there are a lot of obstacles.""
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