Renault opens plant in Hubei province to produce Kadjar SUV

Renault began production on its compact Kadjar sport utility vehicle this month in Wuhan, capital of Hubei province, after more than a decade of selling its imported cars in China.

The facility in Central China also produces engine parts for the Kadjar and is the Renault Group's first engine parts plant outside Europe. The automaker's joint venture with the Dongfeng Motor Corp, called Dongfeng Renault Automotive Co, began construction on the 95-square-kilometer plant at the Wuhan Economic Development Zone in January 2014.

Carlos Ghosn, chairman and CEO of the Renault Group, said the opening of the new plant is "a milestone in our long-term partnership with Dongfeng Group and a major step for the Renault Group's global growth".

At a snowy ceremony on Feb 1 to celebrate the opening of the plant, he said, "China is a core part of Renault's strategy. The plant was built in record time and meets all quality standards. We are very confident in the development of Dongfeng Renault".

The facility includes a vehicle assembly plant, a powertrain plant and a research and development center "to adapt our products to our customers' requirements", the company said.

The plant, backed by 7.76 billion yuan ($1.2 billion) in investment, will produce 150,000 vehicles annually, though the company said the manufacturing base could double that to 300,000 units annually in the future.

Dongfeng Renault Executive Vice-President Hu Xindong hinted that the plant could also produce a full-size SUV, though he didn't elaborate.

In his speech at the ceremony, Dongfeng Motor Corp Chairman Zhu Yanfeng said the joint venture "will be the new engine of the group's growth over the next five years".

Dongfeng and Renault established their 50-50 joint venture in February 2014. By the end of the last year, the joint venture's number of employees totaled 2,000.

The locally manufactured Kadjar will hit the market in March. Chinese actress Fan Bingbing unveiled the model at the 13th China (Guangzhou) International Automobile Exhibition in November 2015.

The amenities in the Chinese version of the Kadjar are slightly different from the European version, released on the continent last year. The Chinese version includes a panoramic sunroof, 4Control and independent rear suspension.

Renault sold 15,850 vehicles last year on the Chinese mainland, down 50 percent from 2014. Current sales come largely from the imported SUV Koleos.

But SUVs continued to be the mainstay of the auto industry, accounting for 25.2 percent of total auto sales last year. Sales of SUVs reached 6.2 million units in 2015, a 52.4 percent growth over 2014.

Ambitious target

Ghosn said he is aiming for a 3 percent share of the Chinese market, similar to Renault's global market share, and expects the Chinese market to grow by 5 percent this year.

"A 5 percent growth in the world's largest car market is more than 1 million units. The growth will be sustainable in the future, and the market is not fluctuating up and down. That will be good for Renault," he said. "We want to be part of the future growth."

Jerome Stoll, executive vice-president of Renault, said the joint venture has "the right product to start with, while the SUV market is growing quickly. ... Kadjar is in the compact SUV segment, the most popular segment, and it is properly priced and is built with quality to attract consumers."

"We will expand our network through competitive dealers and we will add dealers as quickly as the market expands."

Dongfeng Renault's network comprises 125 dealerships on the Chinese mainland and complies with the Renault brand's standards for customer satisfaction, according to the news release.

Stoll added that: "It is very important for the dealers to be profitable. It won't be the case that to expand to more dealers but at the cost of low profitability."

Dongfeng Renault controls its own network of dealers for its autos, both imported and domestically produced, a change from the past 15 years, when Chinese customers could only buy imported Renaults shipped from South Korea.

"We want profitable growth," said Jacques Daniel, president of Dongfeng Renault.

Hu Xindong added that the company is "trying to boost brand awareness".

"We hired Fan Bingbing as the image ambassador and we are sponsoring the Wuhan Marathon this year. It's been challenging to nurture the market because we are a new joint venture to many Chinese people."

History in China

In 1993, Renault established its first joint venture in China with Sanjiang Aerospace Group in Xiaogan, Hubei province. Sanjiang Renault manufactured light commercial vehicles, but ceased production in 2004.

In 2013, Dongfeng Motor purchased Sanjiang's equity in the joint venture and Sanjiang Renault was renamed Dongfeng Renault.

Until the middle of 2014, Renault Beijing Automotive Co sold imported models. It later merged into Dongfeng Renault.

Dongfeng Motor, China's second-largest carmaker by volume, has six overseas partners, tops in the country by number of joint ventures. The company operates ventures with Nissan, Peugeot and Citroen, Volvo, Honda, Kia and Yulon.

haoyan@chinadaily.com.cn

(China Daily 02/15/2016 page19)