Nissan to Build Renault Vehicles in China with Dongfeng
Nissan and Dongfeng have agreed to assemble Renault models in Wuhan, marking Renault’s first local production in China and a shift from its previous import-only approach.
Nissan Motor Company has agreed to assemble Renault vehicles in China through its joint venture with Dongfeng Motor Corporation, setting up Renault’s first local production in the world’s largest car market. The move follows a memorandum of understanding signed between Nissan and Dongfeng after talks in December 2011, according to Chinese media reports cited by Automotive News Europe.
The new arrangement will see Renault models built at a facility in Wuhan, central China, where Dongfeng is headquartered. Until now, Renault has relied entirely on imports to supply China, limiting its market share. In the first ten months of 2011, Renault sold just 15,958 vehicles in China, though this figure was up 49 percent on the previous year, according to LMC Automotive.
Renault’s First Chinese Production Facility
Renault’s lack of local manufacturing has kept its sales volumes low compared with rivals who have established joint ventures and production in China. The Wuhan plant, operated under the new joint venture, is expected to change that. Dongfeng already builds Nissan-brand vehicles for the Chinese market and has similar arrangements with Honda, Kia and PSA Peugeot Citroën.
The first Renault model to be assembled in China is expected to be the Koleos SUV, according to reports in the Chinese press. The Koleos, which shares its platform with Nissan models, is positioned to compete in a segment that has seen rapid growth in China. Local assembly is likely to make Renault products more price-competitive by avoiding import tariffs and reducing logistics costs.
Strategic Implications for Renault and Nissan
The move deepens the Renault-Nissan Alliance’s presence in China, a market that accounted for over 18 million passenger car sales in 2011. For Nissan, which already has a strong manufacturing base in China with Dongfeng, adding Renault models to its production lines leverages existing capacity and relationships. For Renault, local assembly is a critical step in scaling up in a market where import-only brands face cost disadvantages.
Dongfeng’s joint ventures extend beyond Nissan and Renault, reflecting the Chinese government’s preference for local partnerships in the automotive sector. For Renault, this partnership is expected to bring its China operations in line with other foreign manufacturers who have long benefited from localised production. Nissan and Renault have been strategic partners since 1999, and this development follows the alliance’s broader push for growth in emerging markets.
- Nissan and Dongfeng sign memorandum for Renault production in Wuhan.
- Renault’s first Chinese-built model likely to be the Koleos SUV.
- Local production expected to improve Renault’s competitiveness in China.
Outlook for Renault in China
No official timeline has been announced for when Renault models will begin rolling off the Wuhan production line, and further details of the production plan have not been disclosed. The joint venture is expected to help Renault close the gap with rivals who have already localised manufacturing, though it will take time for the brand to build scale in China’s highly competitive market.
For more on how foreign manufacturers are expanding in China, see Volkswagen targets 4 million annual vehicle production in China by 2018
