Carlos Ghosn, Chairman and Chief Executive Officer of Renault, and Xu Ping, Chairman of Dongfeng Motor (DFM) signed the contract for the creation of a new joint venture company for localized production in China: Dongfeng Renault Automotive Company (DRAC). The final approval by the the National Development and Reform Commission of China (NDRC) was granted on 2 December 2013. The investment for the 50/50 JV totals 7.76 billion CNY (€930 million, US$1.3 billion).
The Dongfeng-Renault joint venture will establish a new manufacturing plant which will start producing vehicles in 2016. The new plant, located in Wuhan, the capital of Hubei province, will have an initial production capacity of 150,000 vehicles per year, with the potential for double that in the near future.
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.
The Renault brand has been present in the Chinese market with the imported cars such as Koleos and Fluence. Renault is now switching gear in China with plans for local production. The Chinese new car market—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). The Group is developing its network, set to grow from 92 dealers in 2013 to 120 dealers by 2016.
DFM is a main State Owned Enterprise (SOE) under the direct supervision of the State-Owned Assets Supervision and Administration Commission of State Council. It is one of the three giant carmakers in China. DFG sold more than 3,078,500 vehicles in 2012. In 2012, DFG ranked Nº 146 among the Fortune Global 500, ranked Nº 18 among the Top 500 Chinese Enterprises, and ranked Nº 4 among the Top 500 Chinese Manufacturers. Dongfeng has sold 2.82 million vehicles this year as of end-October, representing an increase of 11.03%, and remains in the Nº 2 position in China.