Can Renault succeed in China?

Bruce Gain is an Automotive News Europe correspondent in France.Bruce Gain is an Automotive News Europe correspondent in France.
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Renault's push into China may be a case of better late than never. The automaker launched a big effort to succeed in the world's biggest auto market at the Beijing auto show last week when the company unveiled the Talisman sedan.

Renault has a lot of catching up to do. Its vehicle sales in China were just 24,000 last year, up 60 percent on the year before, but small compared with the company's global sales of 2.72 million in 2011.

One thing in Renault's favor is that Chinese buyers love Western cars and, because the market is still not a mature one, consumers are not loyal to established brands. The Renault Koleos SUV has been well received by Chinese buyers, accounting for most of the brand's 2011 local sales.

Another plus is that Chinese demand for high-end models is forecast to remain strong while sales of mainstream cars will slow down. Renault is working with its industrial partner Daimler on a new upscale range set to launch in 2014 and CEO Carlos Ghosn told analysts in February that these cars will go to China.

Also positive is that Renault, along with partner Nissan, has invested heavily in electric vehicles. Renault is waiting for Chinese government approval to start a new joint production venture with Dongfeng Automobile and Ghosn noted on the February analysts' call that the government expects automakers to bring along innovations if they want to build in China.

Renault first entered the Chinese market by launching production of the Trafic minibus in 1993 with China Sanjiang Space Group. The French company pulled out in 2003, the same year its alliance partner Nissan went into China.

Until now, Renault has left China to its alliance partner while it focused on other developing markets such as Russia, Brazil, and India. But the market is now too big to ignore. Nissan sold 1.25 million vehicles in the country last year, up nearly 22 percent from the year before.

The Talisman will go on sale in China in mid-June 2012 starting at 318 800 RMB (38,652 euros). The sedan is based on the SM7 built by Renault Samsung in Korea.

"Ghosn always said that Renault would go to China one day but only when they would be able to focus all their efforts on it," said Carlos Da Silva, an analyst for IHS Automotive.

Will China make a difference to Renault when the automaker's home region of Europe is seeing plunging car sales due to the eurozone crisis?

Yes, says Da Silva. "There are high volumes at stake. So even if you grab a little piece of the cake, that would represent something very significant. Given the immense potential of the market, this could eventually pay off."

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