Renault may invest in Dongfeng's Wuhan production site

Gasgoo.com (Shanghai February 7) - Due to the introduction of increasingly strict policies aimed at raising the entry level for foreign automobile manufacturers wishing to enter the Chinese market, Renault has decided not to build a new production site in the country, blog.sina.com.cn reported today. Instead, the manufacturer is considering investing in Dongfeng's passenger vehicle factory in Wuhan's Caidian District. The factory is responsible for production of Dongfeng's Fengshen own brand of vehicles. Renault is considering making use of the Fengshen sales network.

If Renault decides to take this course of action, it will be of great aid to Dongfeng's production program. Starting in 2007, the manufacturer has invested a massive amount of funds in second-phase expansion of its own brand factory in Wuhan, increasing its total production capacity to 240,000 vehicles. Dongfeng's engine production capability has also increased, with the manufacturer able to produce 300,000 A-16 engines a year. As sales of Fengshen models continue to climb, an alliance with Renault would further help increase the manufacturing capability of the Wuhan production sites.

Despite growing sales, the Fengshen brand has yet to prove a stable source of income for Dongfeng. Cooperating with Renault could also help increase the efficiency of the manufacturer's sales management, helping increase profits. Dongfeng already has partnerships with Nissan, Honda, PSA, Kia and Taiwan-based Yulon.