Renault inks JV with Dongfeng for localised production in China

December 16, 2013, Wuhan: Carlos Ghosn, chairman and CEO of Renault, and Xu Ping, chairman of Dongfeng Motor, today signed a contract for the creation of a new joint venture company for localised production in China: Dongfeng Renault Automotive Company (DRAC). The final approval by the National Development and Reform Commission of China (NDRC) was granted on December 2nd, 2013. The investment for the 50/50 JV totals 7.76 billion CNY (€870 million/Rs 7,309 crore).

The Dongfeng-Renault JV will establish a new manufacturing plant which will start producing vehicles in 2016. The new plant will have an initial production capacity of 150,000 vehicles per year, with the potential for double that in the near future. The plant, which will be located in the capital of the Hubei province, Wuhan, will cover a total area of 95 hectares and will lead to the creation of 2,000 new direct jobs.

DRAC’s product plan will begin with a new range of crossover vehicles under the Renault brand. At a later stage, the new joint venture will introduce a range of products under a local brand. Sales of locally produced vehicles will start in 2016. Renault has been present in the Chinese market with imported cars such as Koleos SUV and Fluence saloon. Renault is now swiching gear in China with plans for local production. The Chinese new carmarket, now the world’s largest provides a significant new growth opportunity for Renault.

In 2013, Renault imported vehicles sales will exceed 30,000 vehicles in China (wholesales), thanks to demand for the Koleos. The Group is developing its network, set to grow from 92 dealers in 2013 to 120 dealers by 2016.

Speaking at the JV signing, Carlos Ghosn, chairman and CEO of Renault, said: “Dongfeng and Renault, as parent companies of DRAC, have been closely working together to ensure the future success of DRAC. Our partnership agreement is part of a long-term strategy. The challenge is big and we are ready for it.”

DFG chairman Xu Ping said: “The launching of the Dongfeng Renault project symbolises the start of a comprehensive cooperation between DFG and the Renault-Nissan Alliance.”