SHANGHAI -- Renault has partnered with Dongfeng Motor Group to open its first production facility in China, aiming to tap the country's growing market for sport utility vehicles.
"China is a core part of Renault's strategic plan," the French automaker's CEO, Carlos Ghosn, said at the factory's Monday opening. Dongfeng Renault Automotive, a 50/50 joint venture, owns and runs the Wuhan plant in Hubei Province. Annual production capacity is currently 150,000 autos, but can be expanded to 300,000. The plant will make Renault's compact SUV, the Kadjar, which is seen driving the automaker's growth in China.
Renault is a latecomer to China, where other prominent foreign automakers already have multiple production centers. The 2013 partnership with Dongfeng marked the French company's first major step here, culminating in a total investment of around 870 million euros ($947 million) in the Wuhan plant. Renault will consider raising output from the initial level as demand warrants. The plant is also expected to turn out electric vehicles.
China's new-car sales rose 4.7% in 2015 to 24.59 million vehicles -- the slowest growth in three years for the world's largest auto market, weighed down by a tumbling stock market and decelerating economy. Renault sold around 30,000 autos here in 2014, primarily imports. Introducing the Kadjar is designed to let the company catch up with competitors by courting SUV-hungry young buyers.
Japan's Nissan Motor, another Dongfeng partner and a Renault affiliate, already has a well-developed base in China for parts procurement, production and sales. It sold 1.25 million vehicles in the country last year. Renault looks to deepen cooperation with Nissan to source parts and grow distribution networks.