April 23, 2014 2:25 am JST

Renault may make electric vehicles in China

YASUO TAKEUCHI, Nikkei staff writer

BEIJING -- Renault plans to cooperate with Nissan Motor in a wide range of areas, including procurement and production, as it prepares to begin producing cars in China in 2016.

     The French automaker seeks to cut costs and bolster its competitiveness by taking advantage of partner Nissan's established procurement network in China. It is also considering making electric vehicles there.

     Local production will be important for Renault, a latecomer to the Chinese market, to beat the competition, Gilles Normand, chairman of Renault's Asia-Pacific business, told The Nikkei at the Beijing Auto Show. With partner Nissan's help, Renault will be able to procure some 85% of its parts locally, according to Normand.

     Nissan sold 1.27 million vehicles in China last year through a joint venture with Dongfeng Motor.

     Major rivals such as Volkswagen and General Motors are already established in China and procure 80-90% of their parts locally.

     Renault received permission from Chinese authorities last December to build a factory there, nine years after the plan was first announced. Normand hopes to bolster the automaker's presence in China, given that the Asia-Pacific region accounts for 45% of worldwide auto sales, but only 10% of Renault's.

     Through a joint venture with Dongfeng, Renault will begin producing SUVs and other vehicles in Wuhan, Hubei Province, in 2016.

     The project will cost 870 million euros ($1.2 billion). Production will start at around 150,000 vehicles a year, but Chief Executive Officer Carlos Ghosn aims to eventually lift this to between 600,000 units and 700,000 units.

     Air pollution is a serious problem in China. Therefore, taking steps to protect the environment will be essential, Normand said. Concerning the idea of producing electric vehicles there, various issues are being discussed at Renault, he added.