China’s third largest car maker, Dongfeng Motor, is talking with several foreign car giants about setting up new production ventures, but has denied reports this week it had agreed to build a large car plant with Renault.
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According to Reuters, the official China Daily reported that Dongfeng Motor and the French firm had reached agreement on building a plant via a 50-50 venture, capable of cranking out 300,000 Renaults annually, in the southern boomtown of Shenzhen though investment and timeframes were not given.
But Reuters said the project would come at a time when Beijing is trying to tighten credit and curb investment to guide the world’s sixth-biggest economy to a soft landing – without abruptly braking growth and triggering higher unemployment – while a Dongfeng spokesman denied there had been any agreement with Renault, adding only that the Chinese firm was discussing a variety of ventures with various foreign manufacturers.
Reuters noted, however, that Dongfeng already makes cars with Nissan, of which Renault owns 44%, and added that the French firm, which said in March it would soon outline a strategy to enter the fast-growing Chinese market, had said it was in talks with Dongfeng on a venture, though no plans have been announced.
“If we had an agreement for a tie-up of such scale, don’t you think we would have announced it as soon as possible?” the spokesman asked Reuters, adding: “We’re not sure where the paper got the news, but it’s untrue.”
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By GlobalDataReuters also noted that Renault has said it would probably take advantage of its Japanese partner’s presence in China – it already shares parts, platforms and purchasing with Nissan to enhance efficiency and save money, and the two will share a chief executive, industry veteran Carlos Ghosn, next year.
Dongfeng, which plans to raise more than $1 billion in a Hong Kong share offering, also makes cars with Renault’s rival, PSA Peugeot Citroen, and Honda, the report said.
Dongfeng’s Nissan venture has said it aims to quadruple sales of trucks and cars in China by 2007, giving it a 3% share of the passenger car market, and raise its operating margin to 10% from 8% currently, Reuters added.
