Renault Bets on China with New SUV Plant

Renault SA says its SUV-intensive production strategy in China will pay off in spite of the country’s cooling auto market.

On Monday Renault opened its first Chinese assembly plant, a €870 million ($949 million) facility in Wuhan, with partner Dongfeng Group. The complex, which includes a poweretrain plant, has initial annual capacity of 150,000 units but could be doubled if demand warrants, according to the company.

The factory’s first model, expected to begin volume production in March, will be the Kajar small SUV. Renault will launch a larger SUV there later this year. In 2017, the factory also will begin assembling a few thousand Fluence Z.E. electric sedans from kits supplied from South Korea.

Automotive News Europe notes that Renault sold only 23,000 vehicles in China in 2015, mainly because it lacked a local production base. SUVs account for 30% of passenger vehicle sales in China. Renault says the timing of the Wuhan plant opening is excellent because the country’s demand for SUVs expanded by more than 50% in 2015.