Chinese automakers are carving out a new path for local production in Europe.
Dongfeng Motor Group is in talks with Stellantis to move into the latter's plant in Rennes, western France, for vehicle production, according to foreign media reports. If finalized, it would mark the first time a Chinese automaker achieves large-scale vehicle manufacturing in France.
The partnership between Dongfeng and Stellantis dates back to 1992, when the two established a joint venture to produce Peugeot and Citroën models exclusively for China. More than three decades later, that alliance is expanding beyond China's borders.
In Europe, Having Friends
Chinese automakers have adopted varied strategies to enter Europe in recent years. Chery acquired Nissan's plant in Barcelona, while XPENG tapped Magna's channels and manufacturing network. BYD, meanwhile, is considering building its own facilities. Dongfeng is taking a slightly different route: leveraging the idle capacity of a long-standing partner.
The Rennes facility is among the most vulnerable in Stellantis' European network. Built in 1961, the plant once produced more than 300,000 vehicles annually at its peak. But data from Jefferies shows output has averaged just 70,000 units over the past three years. It currently produces models like the Citroën C5 AIRCROSS.
Image Source: Dongfeng
Stellantis is currently shedding excess capacity worldwide. According to Bloomberg, the automaker plans to sell or share four overseas plants, including Rennes. Of the remaining three, the Madrid facility in Spain has already been handed over to Chinese partner Leapmotor, while the fate of two others in Italy and Germany remains undecided.
For Stellantis, leasing the idle plant to Dongfeng revitalizes assets while avoiding the social costs of closure. For Dongfeng, it offers a shortcut around EU tariff barriers. Currently, exporting Chinese-made EVs to the bloc requires paying a 20.8% additional duty on top of a 10% base tariff. Local production bypasses that cost and meets local assembly requirements for EV subsidies in several European nations.
Cooperation in China is also deepening. Last week, the partners announced a 1 billion euro investment in their Wuhan plant to produce four new Jeep and Peugeot models for both the local and global markets. Dongfeng is funding the bulk of the investment, with Stellantis contributing 130 million euros.
On May 12, Dongfeng also signed a new strategic agreement with COSCO SHIPPING, focusing on overseas logistics and autonomous port trucks to secure its export supply chain. The move signals that Dongfeng is building a comprehensive overseas operating system—spanning everything from product exports and supply chain security to vehicle transport and local production.
Dongfeng executives told Automotive News Europe in 2025 that the company aims to achieve 1 million in annual overseas sales by 2028, combining both exports and local manufacturing. The automaker has already introduced brands like Voyah and Dongfeng Nano in Europe. Securing the French plant would mark a significant leap forward for its European operations.
Europe: A Battleground
The rush by Chinese automakers to establish a footprint in Europe is driven by the scale and competitive dynamics of the local market.
Europe is the world's third-largest auto market, trailing only China and the U.S. More importantly, it serves as a benchmark for technology and branding. If a Chinese brand can gain a foothold here, it signals that its products, technology, and quality have reached global mainstream standards—boosting brand recognition across Southeast Asia, the Middle East, and South America.
Chinese brands are rapidly gaining market share in Europe. Dataforce data shows they now account for 9% of total sales and 14% of EV sales. But that growth was recorded before the tariff hikes. Since last year, the EU has imposed additional duties on Chinese-made EVs, pushing total tax rates for some automakers above 30% and severely squeezing profit margins on exports.
Image Source: Dongfeng
At the same time, EV subsidy policies in many European nations often come with local production requirements, meaning only vehicles assembled in Europe qualify. These policies are pushing Chinese automakers to shift from exporting products to building them locally.
Dongfeng's strategy—leveraging a partner's existing plant—offers cost and efficiency advantages. Building a new factory typically takes years and billions of euros, whereas taking over idle capacity can drastically shorten the time to market.
Moreover, overcapacity in Europe is severe. According to the union IndustriALL, annual car production in the region fell from 16 million in 2018 to 11.4 million in 2024. The auto parts sector shed 54,000 jobs in 2024, with another 22,000 cuts in the first half of 2025. Against this backdrop, local unions are adopting a more pragmatic stance toward Chinese capital.
Of course, Europe is not Dongfeng's only battlefield. The company has launched its "Skyline Sail" plan, focusing on new energy to roll out 55 global models, with a target of deriving 50% of production from local manufacturing.
And it's not just Dongfeng. From Southeast Asia to the Middle East, and South America to Europe, Chinese automakers are pushing local expansion across multiple regions simultaneously. Yet Europe remains unique: it is one of the most fiercely competitive and strictly regulated markets in the world. Whether a Chinese automaker can gain a foothold here largely determines if it can truly call itself a global enterprise.
