Named Dongfeng Renault Automotive Company (DRAC), the joint firm is to establish a new plant, located in the capital of the Hubei province, Wuhan. The plant will start producing vehicles in 2016 and will have an initial production capacity of 150,000 vehicles per year, with the potential for double that in the near future.

Production will begin with a new range of crossover vehicles under the Renault brand and will be expanded at a later stage to include a range of products under a local brand.

The investment for the 50/50 JV totals 7.76 billion yuan (€870m).

Although the Renault brand has been present in the Chinese market with the imported cars such as Koleos and Fluence, the carmaker said the move to local production signifies its plans to switch gear in China and provides a significant new growth opportunity.

Total imported vehicles sales for Renault are set to exceed 30,000 in China in 2013, driven by the success of the Koleos. The carmaker is also developing its network, set to grow from 92 dealers in 2013 to 120 dealers by 2016.

Dongfeng chairman Xu Ping said: ‘The launching of the Dongfeng Renault project symbolises the start of a comprehensive cooperation between DFG and the Renault-Nissan Alliance. The project is a creative endeavour and practice in business model under economical globalisation trends. It is a vital milestone for DFG's self-dependent development in opening process. We expect Dongfeng Renault will bring fascinating products and customer satisfactions for the China auto market. We expect the success of Dongfeng Renault.’

Carlos Ghosn, Chairman and CEO of Renault: ‘Dongfeng and Renault, as parent companies of DRAC, have been closely working together to ensure the future sucess of DRAC. Our partnership agreement is part of a long term strategy. The challenge is big and we are ready for it.’

The final approval for the project was granted by the National Development and Reform Commission of China (NDRC) on 2nd December 2013.