Dongfeng, Renault to form JV

French carmaker Renault SA is planning to form a joint venture (JV) with Dongfeng Motor Group Co, China's second largest car producer by sales, media reports said Monday.

Zhou Mi, a spokesperson at Dongfeng Motor, did not confirm the news, but told the Global Times Monday that "the two companies have been communicating with each other on the matter."

Shanghai-based China Business News reported Monday that the plant will be located in Wuhan, capital of Central China's Hubei Province, and the two companies will invest a total of 6.5 billion yuan ($1.04 billion) in the new plant.

The plant would initially produce a Renault SUV model called Koleos, and is expected to have an initial capacity of 200,000 cars a year, according to the report.

The timing for Renault's localization is not as good as it would have been 10 years ago when the Chinese automobile industry had just started booming, said Zhang Yu, managing director at Shanghai-based consultancy Automotive Foresight.

"But the market for SUVs in China is growing rapidly at present, so at least for SUVs, a localization strategy is not so late," Zhang told the Global Times Monday.

On November 18, another domestic automaker, Chery, announced the groundbreaking on its 12 billion yuan joint venture with British carmaker Jaguar Land Rover. About 60 percent of the venture's capacity will be used to make Land Rover SUVs.

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