A joint venture that lasted for 8 years and eventually landed unfortunately met a “micro-growth†era
After delaying the 8 year long Dongfeng Renault joint venture project, it is finally expected to land quickly.
According to news recently, the Dongfeng Renault JV will be established on the basis of Dongfeng’s acquisition of Sanjiang Renault. The joint venture project has been reported to the National Development and Reform Commission for approval. The total investment is estimated to be 6.5 billion yuan, and the planned annual production capacity will be 300,000.
As one of the few foreign-made car brands that has not yet been domestically produced, Renault has expressed its desire for domestic production since 2004. Since then, disputes over the location of the two sites in Wuhan and Guangzhou have not yet taken place. Today, the backdoor of Sanjiang Renault, the expansion of investment, and the location of Wuhan are three major conditions for Renault to achieve domestic production. This has also enabled the Dongfeng Renault joint venture project to begin substantive progress.
Of course, for a brand that has been marginalized in the Chinese market, Renault’s homegrown challenges have only just begun in the face of increasingly fierce competition and basically bid farewell to the high-growth market environment.
Attitude change
The Dongfeng Renault JV will be established on the basis of Dongfeng’s acquisition of Sanjiang Renault. The current joint venture plan has been submitted to the National Development and Reform Commission and is expected to be put into operation around 2015.
Good things are near
In fact, Renault’s domestic projects did not go well with Sanjiang Renault. As early as 1993, Renault established a joint venture company with Sanjiang Aerospace Group of China to assemble and produce the light commercial vehicle Tafiq. The company's address is located in Xiaogan, Hubei Province, and was subsequently trapped in production due to poor management. According to the requirements of the Chinese government, if Renault wants to “return†to China, it must first resolve the legacy of Sanjiang Renault. “This backdoor Sanjiang Reynolds can be said to be a double-edged sword, on the one hand is Renault's rejection of baggage, and it is also one of Renault’s ways of avoiding increasingly strict policy restrictions on the approval of domestic vehicle production.†The project investment officials said in an interview with reporters.
According to the requirements of the National Development and Reform Commission's relevant automobile industry policies, new automobile manufacturers must carry out mergers and reorganizations of existing automobile production enterprises. At the beginning of this year, Dongfeng Group had wanted to solve the problem through the internal allocation of production qualifications. At that time, senior leaders of Dongfeng Group proposed to Dongfeng Fengshen (the Dongfeng's own brand production base) high-level executives that "Renault will use Dongfeng Fengshen Factory to implement domestic production." This program. If the plan is finalized, simply put, that is, Dongfeng Fengshen will change the nature of the current independent brand into a joint venture company. The new company will produce both Renault brand models and Aeolus brand models. However, Renault ultimately did not agree to such a joint venture considering that the production of self-owned brands and Renault-branded systems would bring coordination problems in management and production.
According to the plan currently prepared for the Dongfeng Renault project, the production capacity of its production plant in Wuhan will be 200,000 vehicles a year. "The first model will be a car, not the SUV model that the outsiders had previously guessed." The Wuhan official said to reporters that if the Dongfeng Renault joint venture project is successfully approved, its domestic base will start construction in 2013.
In addition, the reporter learned from Dongfeng insiders that in the future, Dongfeng Group will send a ministerial-level senior executive from the headquarters to be the "top leader" of the Dongfeng Renault joint venture company, instead of Dongfeng Yulong deputy general manager Liu Zhonghou who has been rumored by the outside. Dongfeng Group Deputy Minister Level). "According to common practice, the Chinese head of the joint venture company will be served by senior executives of the group's ministerial level or above." The insider said.
Compared to the previous eight years of “dragging and bringing waterâ€, the Dongfeng Renault project has now become more substantively advanced, which in part also stems from Renault’s change in attitude toward domestically produced projects. Dongfeng at this time appeared in the role of a "controller" in the joint venture project.
In fact, since the beginning of Renault’s domestic project negotiations, Renault has been hoping to locate the factory in Huadu, Guangzhou, where Dongfeng Nissan is located, and to use the Dongfeng Nissan joint venture system for production. “In 2004, I had to accompany the then Wuhan city leaders to France and Renault to negotiate domestic projects. At that time, the Chinese side had little room to talk about. Even in 2011, Nissan-Renault Alliance CEO Carlos Ghosn went on a business trip. During the period of China, he also repeatedly approached the leaders of the Guangzhou Municipal Government and Dongfeng Nissan, and he had less contact with the Wuhan side,†said the official from Wuhan City.
At that time, Ghosn’s idea was that Renault’s production in Huadu would be a matter of course, whether it be from logistics, parts and components, or from a shared platform with Nissan. Dongfeng's consideration is that the Renault project will remain in Wuhan, and it will be able to better match the policies of the country’s western development. At the same time, domestic production at its own base will benefit its control of the joint venture company.
The stubborn Renault cannot but consider the needs of her own situation and the hard-line attitude of the Chinese side. As one of the few foreign brands that have not yet achieved domestic production, Renault’s sales data in the Chinese market is far from the performance of its alliance partner Nissan in the Chinese market. According to relevant statistics, in 2011, Renault’s sales in China were only 24,275, which was less than 2% of Nissan’s sales in China (1,247,700 units).
At the same time, Renault's performance in the global market this year is not good, but also urgently needs to accelerate the speed of the project in the Chinese market. According to statistics from Renault, in the past November, Renault’s sales in its home market were 41,035, which was a drop of 34% year-on-year. Throughout 2012, Renault Motors continued to be involved in the complexities of losses, layoffs, and shutdowns, so that Renault cars had to follow the example of American auto giants and start selling their assets and taking cash in order to achieve debt reduction.
A long way to go
"As early as the beginning of 2011, Renault has officially announced that the Chinese market will become its main pillar. Renault's domestic projects will obviously not be willing to do additional roles within the framework of the Dongfeng Nissan joint venture," said Zhang Zhiyong, a well-known auto industry analyst.
From the selection of Wuhan to a compromise on the joint venture model, it can be seen that Renault's attitude toward domestic projects is actively changing. But for the Dongfeng Renault joint venture project, whether it can make Renault's performance in the Chinese market has improved is still an unknown.
So far, Renault-made domestic projects are still in the conceptual stage. According to the National Development and Reform Commission's overall approval process for automotive projects, the fastest approval time for the Dongfeng Renault joint venture project will also take place in the second half of next year. “Before the official approval of the project, there is no guarantee that there will be no change. In addition, even if the project is approved, it will take a long time from the planning and construction of the plant to the final production. Renault’s first domestically-made models will be available after 2015 at the earliest.†The above-mentioned Wuhan official stated to reporters.
“Before Renault wanted to enter the Dongfeng Nissan system for production, taking into account that as a domestically produced latecomer, it could maximally control its domestic risk, not only allowing Renault to make more use of existing supplier resources and channel resources, but also Shorten the time to enter the Chinese market.†Jia Xinguang, a well-known analyst in the automobile industry, believes that now that he has chosen to set another stage, large-scale investment of 6.5 billion yuan will inevitably face certain risks.
From the perspective of the domestic automotive market, the domestic auto market has entered a “micro-growth†period since 2011. The overall growth rate of the market has barely maintained at about 6% for two consecutive years (in 2013, the auto market increased by 36%). , And, according to industry insiders generally predicted that the next few years, the domestic auto market will maintain a slight growth of the development trend. For Dongfeng Renault, this undoubtedly means that the increase in market risk in the subsequent period.
“In addition, due to the lack of eye-catching performance in the Chinese market, the current Renault brand's market position in China has become increasingly marginalized. At the same time, with the rapid development momentum of companies such as Volkswagen, GM and Hyundai, the product positioning and the above-mentioned competition Reynolds, whose opponents do not have much difference, can imagine how difficult it is to break through domestically," said Jia Xinguang.
For Renault who has missed the golden era of China's auto market, what will it do to resolve market risks in the future? We will wait and see.
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