Renault takes '1st big step' in China with Wuhan factory
FRENCH car giant Renault opened its first car factory in China yesterday, the last major manufacturer to set up a plant in the country as it looks to tap into the world's biggest car market.
The factory in Wuhan, a carmaking hub in the central province of Hubei, is a joint venture with Chinese manufacturer Dongfeng. It will be able to produce 150,000 vehicles a year at full capacity.
China remains "a growth driver for the global auto industry", Renault chief executive Carlos Ghosn said at the inauguration.
The factory was a "first big step" for the development of the Dongfeng-Renault joint venture and the growth of Renault, he added.
China is crucial to foreign automakers, both as the world's largest market and a key source of revenue outside Europe and the United States.
But until now, the French firm has largely left it to its Japanese alliance partner, Nissan.
At first, the Wuhan factory will build Kadjars, Renault's latest crossover model, a key sector for Chinese consumers.
"We see this niche exploding in China, and it's not going to stop," said Jacques Daniel, CEO of the joint venture.
"We're arriving late but with the right product." But he acknowledged that the current situation in China is challenging.
Sales grew at their slowest pace in three years last year, as a slowing economy and a stock market rout slammed into demand.
A total of 24.6 million cars were sold last year, according to the China Association of Automobile Manufacturers - up 4.7 per cent on the previous year, but only about a third of the near-14 per cent growth seen in 2013.
Also, the economy, the world's second largest, grew 6.9 per cent last year, its slowest pace in 25 years.
Carmakers responded by slashing prices while some even cut production.
The market for high-priced luxury cars has been hit by a government crackdown on corruption and an austerity campaign, launched after President Xi Jinping took office three years ago.
The Chinese industry group forecasts sales will still gain around 6 per cent to top 26 million units this year.
US car giant General Motors was the top foreign brand in China last year, delivering a record 3.61 million vehicles to beat German rival Volkswagen, which is struggling with a global scandal over emissions cheating.