Renault to build new SUVs in China

Renault will start producing joint-venture vehicles with Dongfeng from 2016, with the first cars produced being crossover SUVs.

The two companies have officially signed off their joint-venture project, reportedly worth $1.28 billion, having received approval from the Chinese government earlier this month. The Dongfeng Renault Automotive Company (DRAC) will be based at a new manufacturing plant in China, with the capacity to produce 150,000 vehicles per year initially. The company says it has the potential to double that figure in the future.

The crossover vehicles produced under the new agreement will be created under the Renault brand. A new range of vehicles, badged under a new joint brand, will also be seen in the future.

Renault already has a presence in China, although it has until this point only existed as an importer, bringing in models like the Koleos and Fluence. The French brand now has the chance to make significant in-roads into China, home of the world's largest new car market. As part of its expansion plans Renault will grow its current network of 92 dealers in the country to 120 by 2016.

Renault and Dongfeng will form two sides of a so-called 'golden triangle', with the third arm being provided by Nissan, which already produces cars in China with Dongfeng.

Chairman Carlos Ghosn said: "Dongfeng and Renault, as parent companies of DRAC, have been closely working together to ensure the future sucess of DRAC. Our partnership agreement is part of a long-term strategy. The challenge is big and we are ready for it."