Renault plans SUVs to buck slowing China growth

PARIS Mon Dec 16, 2013 7:47am EST

View of the Renault headquarters in Boulogne-Billancourt, near Paris January 11, 2011. REUTERS/Jacky Naegelen

View of the Renault headquarters in Boulogne-Billancourt, near Paris January 11, 2011.

Credit: Reuters/Jacky Naegelen

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PARIS (Reuters) - Renault (RENA.PA) plans to harness its Formula One renown and alliance with Nissan to build a 3 percent market share as a latecomer to China, after signing a joint venture deal with Dongfeng Motor Group (0489.HK) on Monday.

The French carmaker said it would expand its current vehicle line-up to manufacture near-premium sport utility vehicles (SUV) in 2016 with the Chinese group, which has an existing venture with Nissan. Renault owns 43.4 percent of Nissan Motor Co (7201.T).

"This is what we need to increase brand awareness in China, which isn't yet very widespread," Renault Asia-Pacific chief Gilles Normand told reporters.

Renault is known to Chinese consumers chiefly for its Formula One team, sold in 2009-10, and an ongoing role as engine supplier to the sport, he said on a conference call.

The carmaker last year sold about 30,000 imported cars in China, led by its South Korean-built Koleos SUV, a very modest sales tally for the world's biggest auto market.

By beginning local production in the fast-growing SUV category, Renault expects to outpace Chinese market growth seen slowing to an 8 percent average for each of the next three years from 13.5 percent so far in 2013, Normand said.

The company is targeting an eventual market share of 3 percent, which would currently represent about 500,000 cars, he added. Within three years, the company aims to add 28 Chinese sales outlets to its current 92.

Signing their new venture agreement earlier on Monday, Dongfeng Chief Executive Xi Ping and Renault counterpart Carlos Ghosn announced an 870 million euro ($1.2 billion) investment in the new plant with initial capacity to build 150,000 vehicles annually, set to double within a few years.

($1 = 0.7283 euros)

(Writing by Laurence Frost; Editing by Mark Potter)

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