Re­nault, Bril­liance China Au­to­mo­tive agree new ven­ture

China Daily (Hong Kong) - - MOTORING - HAO YAN haoyan@chi­nadaily.com.cn

Re­nault Group en­tered into a joint ven­ture — cost­ing only 1 yuan (15 cents) — with Bril­liance China Au­to­mo­tive Hold­ings, to fo­cus on the man­u­fac­tur­ing and sale of light com­mer­cial ve­hi­cles in the world’s largest auto mar­ket.

The two com­pa­nies an­nounced the bind­ing frame­work co­op­er­a­tion agree­ment on Wed­nes­day. It cov­ers two trans­ac­tions — Hong-Konglisted Bril­liance China will ac­quire a 100 per­cent hold­ing in Shenyang Bril­liance Jin­bei Au­to­mo­bile, then sell 49 per­cent of the shares to the French au­tomaker.

Both part­ners will in­ject a to­tal of 1.5 bil­lion yuan in ac­cor­dance with the 51:49 ra­tio in the near fu­ture. The joint ven­ture will de­velop, man­u­fac­ture and distribute new ve­hi­cles and ser vices un­der the Jin­bei and Re­nault brands.

The 49 per­cent Shenyang Bril­liance Jin­bei shares were val­ued at 1 yuan, ac­cord­ing to Bril­liance China’s an­nounce­ment.

This will re­sult in a re­struc- tured joint ven­ture, with Bril­liance China hold­ing the ma­jor­ity 51 per­cent stake and Re­nault hold­ing the re­main­der.

“Re­nault is en­ter­ing into a promis­ing and high-po­ten­tial Chi­nese LCV mar­ket, which ac­counts for up­wards of 3 mil­lion ve­hi­cles per year,” said Car­los Ghosn, chair­man and CEO of Re­nault.

“By join­ing hands with Bril­liance China, Re­nault aims to be­come a ma­jor LCV player in China.

“We will bring our man­age­ment ex­per­tise and know-how on the prod­ucts and tech­nol­ogy,” he con­tin­ued.

Ya l e Z h a n g , m a n a g i n g di­rec­tor of Au­to­mo­tive Fore­sight (Shang­hai), said he ex­pects more than just light com­mer­cial ve­hi­cles from the two car­mak­ers’ es­tab­lish­ment of the joint ven­ture.

He said: “Re­nault could be work­ing on some­thing big­ger than merely fo­cus­ing on the light com­mer­cial ve­hi­cles, since the mar­ket is a much smaller mar­ket, with much thin­ner prof­its than the pas­sen­ger car mar­ket.

“B e s i d e s , t h e L C Vs a r e pow­ered by diesel engines that won’t have large growth po­ten­tial in the coun­try.”

Sources in the auto sec­tor, who de­clined to be named, said the new joint ven­ture might help Re­nault con­sol­i­date its pres­ence in China with a new pro­duc­tion base in Shenyang, cap­i­tal of north­east­ern Liaon­ing prov­ince, while Dongfeng Re­nault Au­to­mo­bile might man­u­fac­ture SUVs in Wuhan, cap­i­tal o f C e n t r a l C h i n a ’s Hu b e i prov­ince.

The French au­tomaker ’s new busi­ness would take a mar­ket share of 3.5 per­cent, match­ing its mid to longterm mar­ket share tar­get in the Chi­nese pas­sen­ger car mar­ket, the sources added.

In 2016, the Chi­nese mar­ket saw 353,600 light pas­sen­ger ve­hi­cles and 1.5 mil­lion light trucks sold, while the pas­sen­ger car mar­ket reg­is­tered 28 mil­lion ve­hi­cles in sales vol­ume.

The trans­ac­tion re­mains sub­ject to cus­tom­ary reg­u­la­tory ap­provals in the Chi­nese main­land and Hong Kong, and is sub­ject to the ap­proval of Bril­liance China’s share­hold­ers.

SONG RONGCHENG / FOR CHINA DAILY

Work­ers check a car on a pro­duc­tion line of Dongfeng Re­nault in Wuhan, Hubei prov­ince.

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