Renault Group has just signed a contract with Chinese auto giant Dongfeng Motor to start a new joint venture company, Dongfeng Renault Automotive Company (DRAC), for a localized production of Renault vehicles there. It also becomes the sixth manufacturer to have a join-venture with Dongfeng after Peugeot, Citroen, Honda, Kia and Nissan.
“The launching of the Dongfeng Renault project symbolizes the start of a comprehensive cooperation between DFG and the Renault-Nissan Alliance. The project is a creative endeavor and practice in business model under economical globalization trends. It is a vital milestone for DFG’s self-dependent development in opening process. We expect Dongfeng Renault will bring fascinating products and customer satisfactions for China auto market. We expect the success of Dongfeng Renault.” said Dongfeng Motor Chairman Xu Ping.
“Dongfeng and Renault, as parent companies of DRAC, have been closely working together to ensure the future sucess of DRAC. Our partnership agreement is part of a long term strategy. The challenge is big and we are ready for it.” said Renault Group Chairman and Chief Executive Officer Carlos Ghosn, who signed the contract with Dongfeng Chairman Xu Ping which was approved by the the National Development and Reform Commission of China (NDRC) earlier on 2nd December, 2013.
The 7.76 billion renminbi total investment for the 50/50 joint venture, plans to establish a new manufacturing plant on a 95 hectares area in the capital of the Hubei province, Wuhan, for an initial production capacity of 150,000 vehicles per year by 2016. This is said to create 2,000 new jobs. The Group is also planning to develope its network from 92 dealers in 2013 to 120 dealers by 2016.
Renault accelerates global growth through new joint venture with Dongfeng in China
Plant to be built in Wuhan with initial production capacity of 150,000 vehicles/year
The first vehicles from JV to go on sale in 2016
Project of 7.76 billion CNY (€870 Million)
December 16, 2013, Wuhan, PRC – Carlos Ghosn, Chairman and Chief Executive Officer of Renault, and Xu Ping, Chairman of Dongfeng Motor, today signed a 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 December 2nd, 2013.
The investment for the 50/50 JV totals 7.76 billion CNY (€870 Million).
The Dongfeng-Renault joint venture 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.
This plant will be located in the capital of the Hubei province, Wuhan. The plant will cover a total area of 95 hectares and will lead to the creation of 2,000 new direct jobs. Each partner will bring unique advantages for win-win cooperation and deep synergies: R&D, innovation, design…
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 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 the continuous success of Koleos. The Group is developing its network, set to grow from 92 dealers in 2013 to 120 dealers by 2016.