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French automaker Renault is expected to launch a joint venture in China later this year with local partners to produce its trucks.
The upcoming joint venture, to start probably in October, will be based on a commercial and passenger vehicle producer in Liuzhou in South China's Guangxi Zhuang Autonomous Region, owned by Dongfeng Motor Corp - one of China's biggest automakers.
Renault will have a 32 percent stake in the joint venture, said sources from the company in Liuzhou.
Dongfeng Motor will control 27 percent. Its joint venture with Nissan Motor - 44 percent of this Japanese automaker owned by Renault -will take up 36 percent and the Liuzhou Industrial Holdings Co Ltd will have 5 percent, sources said.
Renault will introduce its Kerax and Premium heavy-duty commercial vehicles to the joint venture which will also produce Dongfeng brand trucks, sources say.
Output of the joint venture will reach 47,000 trucks by 2010, including 7,000 units of the Renault brand. Half will be for export, sources said.
Renault's truck output will stand at 1,000 units next year.
Dongfeng Motor's vehicle producer in Liuzhou, in which Dongfeng Motor and the Liuzhou industrial firm control a 72 and 25 percent stake respectively, now has total assets of 2.3 billion yuan (US$277.8 million) and registered capital of 180 million yuan (US$21.7 million).
With the launch of the truck joint venture, the Liuzhou producer's passenger vehicle business will be incorporated into the Dongfeng-Nissan joint venture, named Dongfeng Motor Co Ltd and launched last July.
The truck joint venture is part of Renault's efforts to revive its production and build three-party synergies with Dongfeng and Nissan in China.
Renault had run a joint venture in central China's Hubei Province with another Chinese partner since 1994 to produce its Trafic wagon before it was mothballed last year because of sluggish sales.
At the end of last month, Renault announced that it would also form a much-heralded passenger car joint venture with Dongfeng Motor. But the size of the investment and the location of the new joint venture have not been revealed.
Car production is planned to start in 2006 with an annual output target of 300,000 units.
The first Renault car to be assembled in China will be Megane. Future models will include the Logan.
The joint venture, awaiting approval from the Chinese Government, will share with the Dongfeng Motor Co Ltd common resources in research and development, power trains and supplier networks.
"Renault's hope-for re-entry to production in China will not come easily as the vehicle market is cooling down from explosive growth over the past two years," said Zhang Xin, an auto analyst with Guotai & Jun'an Securities Co.
"However, it seems that there is no better place in the world than China to expand for Renault as well as all of the world's other auto giants."
Dongfeng Motor Co Ltd, the largest Sino-foreign auto joint venture based in Wuhan, capital of Hubei, aims to double its annual output to 620,000 units by 2007, including 320,000 Dongfeng brand commercial vehicles and 300,000 Nissan marque passenger cars.
Following the tie-up with Renault, Dongfeng will have five foreign auto joint venture partners, the biggest number of a single Chinese automaker.
Dongfeng also operates three auto joint ventures with South Korea's Kia Motors, French PSA Peugeot Citroen and Japan's Honda Motor.
(China Daily July 14, 2004)
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