France carmaker Renault SA (RNO.FR) may this month sign a deal
with Dongfeng Motor Group Co. (0489.HK), China's second-largest
auto company by sales, to set up an 11 billion yuan ($1.8 billion)
joint venture, the China Business News reported Monday, citing a
person familiar with the deal.
The car manufacturing joint venture has gotten approval from
China's supervisor for state-owned assets, the State-owned Assets
Supervision and Administration Commission. State-controlled
Dongfeng also makes cars with PSA Peugeot Citroen, Nissan Motor
Co., Honda Motor Co. and Kia Motors Corp.
The planned joint venture will be set up through a restructuring
of an existing venture between Renault and China Sanjiang Space
Group, said the report.
The Renault-Sanjiang alliance started in 1993, making Renault's
Traffic minibus in China. The French carmaker owns a 45% stake in
the venture. Production was suspended in 2004 due to poor sales
performance, and Dongfeng and Renault have since then been in talks
on a potential tie-up, said the report.
The report said Dongfeng would acquire Sanjiang's 55% stake in
the Renault-Sanjiang project, and the restructured joint venture
will be based in Wuhan, capital of central Hubei province and where
Dongfeng's headquarters are located.
Carlos Tavares, chief operating officer in Renault, said last
month that the company is considering selling electric vehicles in
China through its planned joint venture with Dongfeng, as it seeks
to expand in the world's biggest car market by volume.
Chinese government documents show that the Dongfeng-Renault
project will have annual production capacity of 150,000 passenger
vehicles, including sports utility vehicles and multi-purpose
vehicles, and will have an initial investment of 7.2 billion
yuan.
Officials at Dongfeng weren't immediately available for comment,
while Renault said the deal with Dongfeng is still awaiting final
approval from the Chinese authorities.
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