Instead of building a new production site in China, Renault takes into consideration investing in Dongfeng’s passenger vehicle factory in Wuhan’s Caidian District.
This decision was made due to the introduction of increasingly strict policies aimed at raising the entry level for foreign automobile manufacturers that want to enter the Chinese market. So the company will make use of the Fengshen sales network.
Dongfeng’s Fengshen, which produces its own brand of vehicles, benefits from Renault’s help since 2007, when the company invested a lot in second-phase expansion of its own brand factory in Wuhan. This increased the total production to 240,000 cars and Dongfeng’s engine production capability, to 300,000 A-16 engines per year.
Although the sales of Fengshen models are climbing, the company still has to prove a stable source of income for Dongfeng, to make possible an alliance with Renault.
This will bring an increase in manufacturing capability and efficiency of the manufacturer’s sales management, both translating in increased profits. Dongfeng has already closed partnerships with Honda, Nissan, Kia, Yulon and PSA.
Renault’s COO Carlos Tavares declared that they hope to be able to reach a final deal with Dongfeng Motor Group Co this year, an agreement that will help the company establish industrially in China.