French group Renault may soon enter into a partnership with Chinese auto maker Dongfeng Motor as the two companies will form a $1.8-billion joint venture following 10 years of talks, according to Chinese media. The project was approved in May by Chinese officials and involves restructuring an existing partnership between Renault and China Sanjiang Space Group, said sources close to the talks for the newspaper China Business News, quoted by AFP.
According to information previously published in the press, Dongfeng, the second largest automaker in China, would be in talks for a stake in the other big French automaker, PSA Peugeot Citroen. The partnership Renault – Sanjiang was created in 1993 to produce the Traffic van. Production was halted in 2003, while Renault and Dongfeng have been discussing the restructuring of the company.
Dongfeng took over in June 55% of the project Renault – Sanjiang, and the new joint venture will be based in Wuhan, in the center of the country, said the source. The new joint venture should begin production in 2014, targeting mainly the SUV manufacturing, with an initial capacity of 150,000 units per year, according to Chinese newspaper. Contacted by AFP, a Dongfeng spokesman said the group is working towards a joint venture with Renault. Renault representatives in China have declined to comment.
Auto sales in China, the largest car market in the world last year rose by 4.3% to 19.31 million units. Growth was limited by restrictions in some cities to reduce traffic congestion and due to pollution in big cities. The consulting company McKinsey estimated in a report presented last year that the Chinese car market will grow by 8% per year by 2020, to 22 million units.
Renault is the second largest automaker in France after sales volume. Peugeot last week opened the third factory in China, all three of them located in Wuhan and developed in partnership with Dongfeng.
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