Renault pulls out of Dongfeng passenger car joint venture

PARIS -- Renault Group said it will stop selling Renault brand passenger cars in China and will focus on light commercial vehicles and electric vehicles in the market.

The automaker will transfer its shares in the Dongfeng Renault Automotive Company joint venture to Dongfeng Motor, Renault said Tuesday. Dongfeng will stop Renault brand-related activities, the companies said.

Renault's joint venture with Dongfeng in Wuhan builds the Renault Captur, Kadjar and Koleos crossovers as well as powertrains.

Renault's LCV business in China will continue to be operated through Renault Brilliance Jinbei Automotive. Its EV business will be developed through the two existing joint ventures: eGT New Energy Automotive and Jiangxi Jiangling Group Electric Vehicle.

Renault said it will continue to provide aftersales service for 300,000 customers through Renault dealers and through its alliance with Nissan.

Renault and Dongfeng will continue to cooperate with Nissan on engines and components supply to Dongfeng and license diesel engines to Dongfeng. Renault and Dongfeng will cooperate on intelligent connected vehicles.

Dongfeng Motor operates joint ventures in Wuhan with PSA Group and Honda.

Renault returned to China in 2016, a market it had previously left to Nissan, when it opened a factory in Wuhan with Dongfeng Motor.

Former CEO Carlos Ghosn had targeted annual sales of up to 800,000 vehicles. Its volume in China fell 17 percent to 179,571 in 2019, Renault said on Jan. 17 when it released global sales results for last year. Nissan is far bigger in the market. Its China deliveries dipped  just 1.1 percent to 1.55 million vehicles last year.

The move is part of a global realignment underway by Renault and its alliance partners Nissan and Mitsubishi.

The automakers will unveil new mid-term business plan next month. Part of the strategy is to divide the world into regions that will be spearheaded by one of the partners.

In announcing the new “leader-follower” alliance strategy in January, the three automakers said that Nissan would take the lead in China and that Renault would take the lead in Europe and Mitsubishi would head up southeast Asia.

Renault's downsizing in China previews other moves that might follow at Nissan and Mitsubishi, as they reposition their footprints in other markets.

"This new China strategy will enhance Renault competitive advantages to sustain long-term presence in the Chinese market and maximize synergies with Nissan under the new Alliance concept of 'leader-follower,'" Renault said in its release.

Under the new approach, the alliance companies will also divide engineering work, with one company leading r&d and product development in a given area and the other companies sending people to assist. Renault was to be handed the lead in developing light commercial vehicles.

Light commercial vehicle sales in China reached 3.3 million in 2019 and are projected to maintain steady growth, Renault said. Its local joint venture is expanding its LCV lineup in the country to five core models by 2023, the company said.  

In electric vehicles, Renault projected that EVs would account for 25 percent of the local market by 2030. Through eGT, a partnership that also includes Nissan and Dongfeng, Renault expects to launch a local derivative of the Dacia Spring concept model in China in 2021. And through its Jiangxi Jiangling tie-up, Renault plans to have four EV models for China by 2022.