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Renault goes to China
By Yoann Besnard on 20 December 2005 | 
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Having a factory in China is an obligation if you want to be considered as serious by Chinese car dealers and customers. Renault currently sells four models — Scenic, Megane, Vel Satis and Laguna — in the Middle Kingdom but 740 vehicles found an owner last year. In the middle of last year, Renault teamed up with Dongfeng, which produces the old ZX, the Xsara, Picasso and the 307 in a joint venture with PSA.
The purpose of this joint-venture is to produce 300, 000 Logan per year but talks took longer than planned and Carlos Ghosn has clearly expressed the will to focus on core markets. This difficult situation for Renault, which won’t unveil any new model before 2007, could lead to them postponing the Chinese project. They might even cancel it.
This hypothesis, revealed by two insiders last week, has allowed a speeding up of the process. Four days after it was revealed in the press, the provincial government in Hubei province stated on its website that it would invest 60 billion yuan (US$7.43 billion) in new projects which should benefit the Dongfeng-Renault venture. No comments have been made by either Renault or Dongfeng but for a French carmaker, getting a foothold in China is not up for discussion. Renault is in a difficult situation but it doesn’t mean it must refuse all opportunities or stop projects, especially on the next biggest car market in the world.
