Renault and Dongfeng have signed an agreement that will see the two companies produce SUVs in China under the name Dongfeng Renault Automotive Company (DRAC). Production is set to start in 2016 at a new plant based in the capital of the Hubei province, Wuhan.
The first vehicles to be produced by DRAC will be a new range of crossovers badged as Renaults. At a later stage, the new joint venture will introduce a range of new products under a local brand, with sales of these vehicles set to start in 2016.
The deal is said to be worth €870 million (£735 million), with the plant creating 2,000 new jobs and having initial production capacity of 150,000 vehicles per year. That figure is set to double in the near future.
“Dongfeng and Renault, as parent companies of DRAC, have been closely working together to ensure the future success of DRAC,” said Carlos Ghosn, Chairman and CEO of Renault, “Our partnership agreement is part of a long term strategy. The challenge is big and we are ready for it.”
Before the tie up, Renault was already present in the Chinese market with sales exceeding 30,000 units this year. Strong sales from the Renault Koleos and Fluence helped achieve this figure. The Chinese new car market is now the largest in the world, providing ample growth opportunity for manufactures making the move.