Renault-Dongfeng joint venture approved by China regulator

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HONG KONG -- Renault said China's top economic planner has approved a joint venture between the automaker and Dongfeng Motor Group to build and sell cars in China.

The new venture will build 150,000 vehicles a year. The partners will also produce engines and will consider manufacturing key engine components.

Renault did not disclose which vehicles it will build in China. The venture will help the company to strengthen its scale in the Chinese market, Renault said in a statement today.

According to a Chinese media report in July, the joint venture plans to begin producing SUVs and minivans in 2014.

The 50-50 venture will be known as Dongfeng Renault Automotive. It will have total investment of 7.76 billion yuan ($1.3 billion).

Approval was given by the National Development and Reform Commission, both automakers said. Renault announced the partnership last year along with plans to manufacture its own cars in China.

Renault sells about 50 percent of its vehicles in Europe and intends to reduce its reliance on the region, where car demand is at a two-decade low.

The French carmaker's entry into China trails competitors such as Volkswagen Group by decades. Local production is key for competing in China because imported cars are hit with a 25 percent tariff.

Renault has sold fewer than 30,000 cars this year in China, a stark difference from its Japanese partner, Nissan, which delivered more than 1 million vehicles in the country, ranking third among global carmakers.

Rival PSA/Peugeot-Citroen already operates a joint venture with Dongfeng in China and is discussing plans for Dongfeng to take a stake in PSA.

A PSA spokesman would not comment on the Renault and Dongfeng agreement, saying only that any recent developments in China have not affected PSA's successful joint venture with Dongfeng. PSA's negotiations with potential alliance partners in China remain "on track," the spokesman said.

Bruce Gain, Reuters and Bloomberg contributed to this report


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