Renault inaugurates its first China plant image

France’s second-largest automaker sees strong potential on the Chinese marker, as it has just inaugurated Renault’s first assembly plant in the country, on Monday.

Renault’s decision to build a plant in China was long prolonged, announcing its intentions to build sport utility vehicles only two years ago at its joint venture factory with Dongfeng Motor Group. The demand for SUVs has been growing since, but the Chinese auto market slowed its pace lately. However, the French automaker said it still saw great potential in China, as it prepared to cut the ribbon on its first assembly plant in the world’s biggest auto market. An 870-million-euro (942-million-dollar) investment has been required to build the factory in Wuhan, eastern-central China, having an initial output capacity of 150,000 vehicles per year. However, the production could be eventually doubled or even tripled, Jacques Daniel, head of Renault’s joint venture with local partner Dongfeng, said. “Are we arriving after the battle? Not at all, because this market is not going to stop,” Daniel told reporters ahead of the opening ceremony. “Entering a market of 20 million vehicles a year is no bad thing for a manufacturer.”

Unlike its alliance partner Nissan, the French company relied only on less profitable imports in China, and its late arrival as a manufacturer comes at a time when the projections are seeing only a 4-6 percent growth of the Chinese automotive market in 2016, far from the double-digit numbers of preceding years. However, Renault is basing its strategy on the SUV segment, which accounts for 30% of the Chinese market and is the fastest-growing segment, increasing by 53% in 2015. “Renault does not depend on China, China is only an opportunity for us,” Chief Executive Carlos Ghosn told reporters. “It will be at the center of the next strategic plan.” The Dongfeng-Renault plant is about to begin assembling the Renault’s Kadjar compact SUV, followed by a larger version later this year and an electric Fluence sedan in 2017.