Famous car maker Renault seems to be growing at a fast pace as the auto giant recently signed a $1.3 billion deal with Dongfeng Motor Group, which is based in China. Renault, France's prominent auto maker, will be manufacturing Sport Utility Vehicles (SUVs) in the joint venture plant of both companies. The duo's alliance will be closely assisted by Nissan Motors, which in turn is a confederate to Dongfeng in manufacturing automobiles. The trio of Renault, Dongfeng and Nissan is being considered a golden triangle, which will work in tandem to utilise resources for cost effective production.
With a target to sell domestically manufactured vehicles in China, Renault and Dongfeng officially formed their syndicate of $ 1.28 billion in Wuhan. The joint venture will be in the central province of Hubei and production will start in 2016. Describing the project as a strategic alliance, Renault's Chief Executive Officer, Carlos Ghosn, said, "China has the biggest growth potential in the world. Dongfeng has paramount knowledge of the Chinese market. There were many opportunities in China, especially in developing electric vehicles. This project is about exploring new frontiers. The challenge is big but we are ready and well-prepared." To which, the Chinese firm's President, Xu Ping, added "I hope we're going to see a new success with Dongfeng-Renault and it will help us to go global".
Dongfeng is among the largest auto manufacturers in China with recorded sales of 3.08 million automobiles in 2012. It has been associated with Japanese giant Nissan for a long time. Also, the Chinese car maker has existing ventures with Renault's French rival Peugeot. Analysts believe that arrival of Renault in Chinese auto market is a bit overdue. In fact, by the time it starts manufacturing vehicles in Wuhan, the French car maker would still be lagging behind the likes of Volkswagen, General Motors and Toyota Motors. This concern was simply intercepted by Carlos Ghosn, who said, “Arriving late or soon is not the issue, Are you ready? That’s the issue.”
Prior to the alliance,the French auto giant was the only car maker among the top 10 global automotive manufacturers not to have a production facility in China. This business accord is believed to have redefined Renault's market in China as the former was already selling vehicles in the Chinese domestic market. Apparently, after setting up the plant in the country itself, Renault aims at intensifying figures to a much more profitable level. However, Renault had earlier also attempted to embark production in China through a coalition with China Space Sanjiang Group in the year 1993. The objective was to manufacture traffic mini-buses but the project was not successful and production eventually stopped in 2003. Since then, Dongfeng and Renault were in talks about forming a strategical federate.
China has been constantly growth in auto sales, with 4.3 per cent rise in the year 2013, which they surpassed effectively in the first eleven months of this calender. The country with the largest population is sure to see an upscale of automobiles in the coming years. With Renault deciding to assist the former country in manufacturing vehicles, the concord is expected to turn out to be profitable for both.
