Renault Exits Main Chinese Joint Venture, Sells 50 Percent Stake To Dongfeng

Renault may have finally admitted it can’t crack the Chinese car market as the French automaker announced the exit from its main local joint venture with Dongfeng Motor Group.

Renault said on Tuesday it is pulling out of the Dongfeng Renault Automobile Company, selling its 50 percent stake in the joint venture to Dongfeng Motor Group. The carmaker blamed poor sales for its decision.

This makes Renault only the second global automaker to exit a major venture in China in recent years after Suzuki in 2018. Dongfeng Renault, the French company’s main passenger car business in the world’s biggest vehicle market, sold only 18,607 cars in 2019 and reported an operating loss of more than 1.5 billion yuan ($212 million). That was far below its annual capacity of 110,000 vehicles.

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As a result of the transaction, Dongfeng plans to revamp and upgrade the venture’s existing car plants. According to Reuters, which cites a spokeswoman for the Chinese automaker, the plants will no longer make Renault-branded cars. Up until now, the JV has been building the Kadjar, Koleos, Captur and City K-ZE – the later a fully-electric vehicle.

Mind you, this doesn’t mean Renault will exit the Chinese car market altogether. The company said it will remain present in China with other ventures, a light commercial vehicle business with Brilliance China Automotive Holdings and an electric vehicle venture with Jiangling Motors Corporation Group. The commercial vehicle JV plans to roll out five new models before 2023 and aims to export to other markets.

Despite Renault’s exit from its joint venture with Dongfeng, the two companies said they would continue to cooperate on connected vehicles and work with common partner Nissan on new generation engines.

“We are opening a new chapter in China. We will concentrate on electric vehicles and light commercial vehicles, the two main drivers for future clean mobility and more efficiently leverage our relationship with Nissan,” said Francois Provost, chairman of the China region for Renault.

Note: Renault City K-ZE electric crossover pictured