AutoBeta(AutoBeta.net)04/14 Report--

On April 14, Renault Group announced a new strategy in the Chinese market. It is understood that the future Renault Group's business in China will focus on light commercial vehicles and electric vehicles, which will constitute the two pillars of its business in China in the future. As for the traditional fuel vehicle business, Renault Group has reached a preliminary agreement with Dongfeng Automobile Group Co., Ltd. to transfer the shares held by Renault Group in Dongfeng Renault Motor Co., Ltd. to Dongfeng Automobile Group Co., Ltd.

According to a statement issued by Dongfeng Motor, due to the decline in the domestic automobile market and the operating conditions of Dongfeng Renault, shareholders intend to reorganize Dongfeng Renault, and after consultation between Dongfeng Automobile Group and Renault, signed a non-binding memorandum and reached a preliminary intention. Renault intends to transfer its 50% stake in Dongfeng Renault to Dongfeng Automobile Group, and Dongfeng Renault will stop its business activities related to the Renault brand.

Data show that Dongfeng Renault was established in 2013, jointly funded by Dongfeng Motor Group and France Renault Group, each holding 50% of the shares. Dongfeng Lei's development in China is not long, compared with Dragon Motor, Dongfeng Nissan and so on is a young joint venture brand, but Dongfeng Renault's development in China is not satisfactory. Data show that Dongfeng Renault began to decline after peaking at 72000 vehicles in 2017, with sales of only 18500 vehicles in 2019, down 63 per cent from a year earlier. Affected by the epidemic, the cumulative sales of Dongfeng Renault from January to March 2020 were only 663 vehicles, down 88.65 percent from the same period last year.

Although Dongfeng Motor Group and Renault Group have signed a memorandum on the equity transaction, Renault Group has repeatedly stressed that the transfer of Dongfeng Renault's shares does not mean that Renault will withdraw from the Chinese market and will further cooperate in the field of electric vehicles between Renault and Dongfeng.

In fact, in addition to Dongfeng Renault, Renault has also established joint ventures with brilliance China and Jiangling Motor. In the field of electric vehicles, there are easy Jet New Energy vehicle Co., Ltd. And Jiangling Group New Energy vehicle Co., Ltd. In the field of light commercial vehicles, there is Huachen Renault Golden Cup Automobile Co., Ltd.

Renoth is referring to the company that has further partnered with Dongfeng in new energy vehicles. Easy New Energy Automobile Co., Ltd., founded in 2017, is an electric vehicle development company dedicated to zero emissions, a joint venture between Dongfeng Automobile Group and Renault-Nissan Alliance, in which Renault and Nissan each hold 25% shares. Dongfeng holds 50% of the shares. Dongfeng Motor Group said that Dongfeng and Renault decided to strengthen their cooperation with Nissan because of the successful cooperation of the Egett new energy project. Dongfeng and Renault will also continue to cooperate with Nissan on new generation engines and continue to license diesel engines to Dongfeng Motor Co., Ltd.

Dongfeng Motor Group said that in view of Dongfeng Renault's limited financial contribution to the group, the company believes that the above restructuring will not have a significant impact on the group's business operations or financial position.

Although Renault Group has stressed that it will not withdraw from the Chinese market, the era of Dongfeng Renault in China has been officially announced, and the production of four domestic models of Dongfeng Renault will be completely discontinued. The development of Renault Group in China may continue to exist in the form of Jiangling New Energy and Huachen Renault. Industry insiders believe that the adjustment of Renault's strategy is a wise move. In the highly competitive Chinese automobile market, the development of fuel vehicles is indeed not Renault's strong point, but in light commercial vehicles, especially in the electric vehicle market, the energy invested by major car companies is not very great, and Renault still has a lot of room for improvement. However, some netizens believe that although Renault is the largest electric car manufacturer in Europe, under the background of traditional car companies and new car-building forces marching into new energy vehicles on a large scale, Renault is under great pressure to develop electric vehicles in China. It is difficult to guarantee that there will still be a situation of disobedience.

Due to the depression of the automobile market, some automobile companies have great difficulties in their operation, and many shareholders of the joint venture company choose to sell their shares. From October to November 2019, Changan Automobile and PSA Group successively announced the sale of 50% of their shares in Changan Peugeot Citroen; from June to September 2018, Suzuki transferred all the shares of Changhe Suzuki and Changan Suzuki, and Suzuki officially withdrew from the Chinese market.

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