Renault plans China car venture with Dongfeng-media

BEIJING Sun Nov 25, 2012 10:55pm EST

BEIJING Nov 26 (Reuters) - French carmaker Renault SA is planning to launch a joint venture to build cars in China with Dongfeng Motor Group Co, the country's second-largest automaker, a local newspaper reported.

The two firms plan to invest a combined 6.5 billion yuan ($1.0 billion) in a plant in the central province of Hubei with an initial capacity of 200,000 cars a year, China Business News said on Monday, citing unnamed sources at Dongfeng.

Chen Guozhang, chief executive of Renault Greater China, was quoted by the newspaper as saying the planned JV would operate a plant formerly used by Renault when it had a local partner in the mid-1990s.

A Dongfeng spokesman said he had no information on the joint venture, while a Renault spokeswoman in China declined to comment.

Dongfeng also has car ventures with Nissan Motor Co , Honda Motor Co and PSA Peugeot Co.

All foreign car makers producing vehicles in China must operate through a joint venture with a local firm. Renault briefly produced cars in China in the mid-1990s in a tie-up with a little-known state-owned maker of special purpose vehicles.

The French firm is currently one of the few foreign automakers to sell exported cars in China, but has met with a lackluster response.

Renault's Chen was also quoted as saying the automaker would not need to seek a new production licence from the government, as it would able use the one from its previous joint venture.

Dongfeng shares rose more than 6 percent on Monday morning, outperforming a slightly weaker overall market. ($1 = 6.2285 Chinese yuan) (Reporting by Fang Yan in BEIJING and Kazunori Takada in SHANGHAI; Editing by Richard Pullin)