Renault, Dongfeng Plan to Build Cars Together in China, Report Says

The automakers plan to invest a combined 6.5 billion yuan ($1 billion) in a plant in the central province of Hubei with an initial capacity of 200,000 cars a year, China Business News said on Monday, citing unnamed sources at Dongfeng.

Renault is one of the few foreign automakers that does not build cars in China. In 2011, the company's China sales increased by 65 percent to 24,275 cars.

Chen Guozhang, chief executive of Renault Greater China, was quoted by the newspaper as saying the joint venture would operate a plant formerly used by Renault when it had a local partner in the mid-1990s.

Chen was also quoted as saying the automaker would not need to seek a new production license from the government, as it would able use the one from the previous venture.

A Dongfeng spokesman said he had no information on the project, while a Renault spokeswoman in China declined to comment.

Dongfeng also has car ventures with Nissan, Honda and PSA/Peugeot-Citroen.

All foreign carmakers producing vehicles in China must operate through a joint venture with a local firm. Renault briefly produced cars in China in a tie-up with a little-known state-owned maker of special purpose vehicles.

Like other automakers facing a slump in sales in Europe, Renault is trying to tap into fast-growing emerging markets, where demand remains strong, especially for cheaper models.

Renault already expects to make half of sales outside Europe this year, ahead of target set for 2016.

Last week, La Tribune reported that Renault plans to launch two low-cost vehicles, including a Tata Nano rival, in India at the end of 2014.