July 5, 2017 / 7:15 AM / a month ago

Renault-Brilliance deal seeks to tap China van growth

FILE PHOTO: A Renault logo covered with mud and dust is seen on a car in Paris, France, March 15, 2017.Gonzalo Fuentes/File Photo

PARIS (Reuters) - Renault (RENA.PA) announced a major new commercial vehicles partnership with China's Brilliance (1114.HK) on Wednesday, hoping to tap a buoyant market for light trucks and vans that is expected to outperform Chinese car sales growth.

Renault and Brilliance, whose JinBei unit is already an established Chinese bus brand, have signed a framework deal to create a manufacturing and sales joint venture, the French carmaker said in a statement.

The company, to be 51 percent-owned by Brilliance and 49 percent by Renault, will develop new Renault and JinBei vehicles, building on the Chinese brand's existing lineup and sales network, Renault said.

The move will harness growth opportunities created by China's surge in e-commerce and tightening emissions standards, Renault commercial vehicles chief Ashwani Gupta told Reuters.

FILE PHOTO: Workers check a car at Renault's assembly plant in Wuhan, Hubei province, China, February 1, 2016.Darley Shen/File Photo

Delivery and utility vans currently account for about 3 million annual sales or 11 percent of China's light-vehicle market - a share Renault expects to increase significantly.

"People are going for door deliveries, and we're seeing more European vehicle architectures and powertrain technology driven by environmental regulation," Gupta said by telephone.

Raindrops cover the logo of French car manufacturer Renault on a automobile seen in Paris, France, January 14, 2016.Christian Hartmann/File Photo

"These two factors are significantly changing the game in the Chinese commercial vehicle market."

Brilliance, which also manufactures BMW (BMWG.DE) vehicles in a separate partnership, will buy out minorities in its JinBei subsidiary before selling a 49 percent stake to Renault, the companies said.

Renault declined to set a date for the creation of the joint venture, which remains subject to approval by Chinese and Hong Kong regulators, as well as by Brilliance shareholders.

Reporting by Laurence Frost and Sudip Kar-Gupta; editing by Andrew Callus and Jason Neely

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