French carmaker Renault SA was finally able to secure full access to China's auto market on Monday by sealing a joint venture agreement with state-owned Dongfeng Motor Group. Wuhan city, home to Dongfeng, is fast shaping up as China's own Detroit, a car manufacturing hotspot, by producing roughly 1 million vehicles a year, Reuters said in a report.
According to the report, Renault and Dongfeng finally inked a $1.3 billion 50-50 partnership to introduce the French automaker's own locally-assembled models in the world's biggest auto market. The deal was closed nine years after the two companies first announced plans for the joint venture.
Reuters said the deal allows Renault to fully tap automobile demand in China. China's central government requires all foreign carmakers to have a local partner to be allowed to produce cars in the country.
Under the deal, Renault will invest CNY7.76 billion ($1.28 billion) to build a factory in the central city of Wuhan. The first car is expected to roll off from the production line in 2016, the report said. Renault plans to manufacture 150,000 cars a year in Wuhan. It will also set up a jointly-run network of retail stores in the country, Reuters added.
Join the Conversation