By on April 15, 2020

With the rippling economic effects of the coronavirus outbreak starting to take hold, some industry analysts have begun floating the increasingly popular theory that various markets could stage a retreat from China. While the Chinese Communist Party’s mishandling of the pandemic — including cover-ups (and the possible manipulation of the World Health Organization) that ultimately encouraged the virus’ spread — are often cited as the impetus for the change, the actual decisions will be largely economic. COVID-19 threatens countless nations’ financial welfare as it simultaneously disrupts global supply chains.

The virus has also sent the auto industry into a holding pattern as manufacturers and suppliers hemorrhage money. While the assumption exists that this situation could encourage international automakers to refocus on domestic production, there haven’t been many examples to point to. Renault changed that this week, announcing plans to abandon its joint venture with China’s Dongfeng Motor Corporation. The move, however, may have less to do with the presumed industrial exodus than the company’s general financial situation. 

Renault handed alliance partner Nissan the lead in China, allowing the French automaker to play a lesser role in the market. However, that still included a prolonged commitment to state-owned Dongfeng Motor Corp — a prerequisite for doing business within the country. All foreign entities are subject to entering into joint ventures if they’re to manufacturer and sell product within China, though its government has made a handful of exceptions in the past.

Despite getting off to a promising start in a period where China seemed to have unlimited growth potential, the market peaked by 2017. In 2020, it began recoiling aggressively as the coronavirus shut down the nation’s manufacturing capabilities. China looked to be on the cusp of a recession months before COVID-19 became a factor; consumers were losing buying power and new emission rules complicated the type of cars citizens could buy. Renault has a JV facility in Wuhan, where the virus originated, that builds passenger vehicles for the domestic market. That site had to be idled as the health crisis evolved, creating new headaches for the brand.

The manufacturer has also been well off its sales targets for the region. Back in 2014, Renault was aiming for 700,000 annual sales in China, with former Renault-Nissan Alliance head Carlos Ghosn saying the number could actually be as high as 800,000. Instead, the manufacturer didn’t even break 200,000 Chinese deliveries in 2019, losing a sizable share of the market in the process. Nissan held strong with over 1.5 million sales.

With both companies focused on their bottom line (each issued profit warnings in 2019), it makes sense to let Nissan carry the torch while Renault retreats from the market. According to the French automaker, splitting from Dongfeng is part of “global realignment” that includes alliance partners Nissan and Mitsubishi. The official plan won’t be released until next month, though Renault said its changing role in China is definitely part of the overall strategy.

“Groupe Renault unveiled today its new strategy for the Chinese Market, building on two of its key pillars,” it explained in a release. “Electric Vehicles (EV) and Light Commercial Vehicles (LCV).”

Renault plans to continue providing aftersales services for 300,000 customers through established Renault dealers and via its alliance with Nissan. Meanwhile, Dongfeng will have to buddy up with Nissan for its supply of engine components as Renault helps with mobility projects and EVs. All shares in the joint venture will be transferred back to Dongfeng.

[Image: TY Lim/Shutterstock]

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24 Comments on “Renault Ends Chinese Partnership, Looks for a New Start...”


  • avatar
    thornmark

    GM big trouble in little China

    Buick is walking dead brand, plans to export its Buick things from China are fully dead

  • avatar
    thelaine

    It’s not the virus, it’s the panicked economic lockdown that is causing the biggest problems. Let people work, for fks sake. We do not shutter our economy for the flu season. This is why. Let my people go.

    • 0 avatar
      SCE to AUX

      “We do not shutter our economy for the flu season.”

      This isn’t the flu season.

      In my brief 56 years, I don’t know of anyone who has died of the flu. In the last month, I have 4 friends of friends who died of the CV. They are not the same malady, despite your ridiculous claims.

      Nobody wants the economy shut down, unless you have a conspiracy theory to dispute that.

      • 0 avatar
        thelaine

        You have been wrong this whole time, your personal experience should not guide the nation’s economic policy. It has been clear from the beginning that the cure would be worse than the disease, and now we are paying the price of our panicked response, with more to come. Lots of people, the majority, it appears, did, in fact, advocate for a shut down economy. That is why we have done it.

        In any event, it doesn’t matter what you “want.” It matters what you do. A strategy of attention to the elderly and compromised, along with all the other measures short of putting people out of work was the one that we should have chosen.

        Clearly, the grossly exaggerated doomsday death “models” were the impetus for mass hysteria and the subsequent overreaction. We should have kept our heads, like we do every cold and flu season, regardless if it is accompanied by another virus.

        The proof that my position is correct is that we have never, ever locked down our economy in the face of a crisis and we will never, ever do it again. It was a mistake. In the future, we will see “targeted” responses, as the minority have been advocating from the beginning.

        This economic disaster is self-inflicted and was totally avoidable. People are now paying an enormous price, particularly the lower middle class and working poor, who have been devastated, and there is much more to come. Early death from all causes, suicide, drug addiction and crime are all direct results of unemployment, welfare dependence, and poverty. We did it to ourselves. Shame on us. When rationality was needed, we panicked.

        • 0 avatar
          la834

          > It has been clear from the beginning that the cure would be worse than the disease, and now we are paying the price of our panicked response, with more to come. …….
          Clearly, the grossly exaggerated doomsday death “models” were the impetus for mass hysteria and the subsequent overreaction.

          “Grossly exaggerated” “Overreaction”? Please. Do you know of any other deadly infections that have gone from nonexistent to over 2 million cases in less than six months? This is NOT like the flu.

        • 0 avatar
          dal20402

          thelaine, either you can’t do arithmetic, or you’re a sociopath.

          Without social distancing, this thing spreads like wildfire, as fast as any infectious disease we’ve encountered in the era when we had the tools to study them. It kills a fifth of the elderly it infects, and it kills about half a percent of everyone else. Let it wash over everyone who is not “elderly and compromised,” and you’re probably talking over a million deaths in the U.S., and the need to subject elderly people to basically zero human contact until a vaccine is available.

          We handled it the right way, albeit too slowly, because eventually we started listening to the public health experts. We are a resourceful people who will recover from the economic damage.

          • 0 avatar
            thelaine

            Let’s see if I can simplify my argument so that you can understand it: social distancing good, economic lockdown bad.

            Let’s look at the statistic that matters most: confirmed cases per one million population. Spain (3,799); Switzerland (3,043); Italy (2,687); Belgium (2,897); Italy (2,687); France (2,195); USA (1,857); Portugal (1,774); Netherlands (1,643); Austria (1,590) Germany (1,579); United Kingdom (1,451); Norway (1,243); Sweden (1,181); Denmark (1,153).

            Far from demonstrating the failure of Sweden’s policy, the data actually commends Sweden’s decision to adopt only targeted social distancing. They have one of the lowest cases per capita of any major country in Europe.

        • 0 avatar
          Arthur Dailey

          @theLaine: supporting Petain and ignoring science since June 1940.

      • 0 avatar
        JimZ

        SCE,

        don’t engage it. It’s been bleating the same crap for weeks now, repeating the same lies over and over.

        You’re not going to convince it to stop parroting what it reads on right-wing blogs.

        (as an aside, isn’t it funny how the same people who were clutching their pearls about how the ACA’s supposed “death panels” would send grandma and grandpa off to their slaughter are now saying we should send grandma and grandpa off to slaughter for the “good of the economy?” S**theads like Dan Patrick love saying things like that so long as they have no skin in the game.)

        • 0 avatar
          EGSE

          Trolls deliver for TTAC.

          “Here are the top 10 website metrics for conversion that every company should measure:

          Value Per Visit.
          Cost Per Conversion.
          Conversion Rate.
          Total Number of Sessions or Visits.
          Top Pages.
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          Time Spent on Site.
          Interactions Per Visit.”

          https://www.lyfemarketing.com/blog/website-metrics/

          • 0 avatar
            Arthur Dailey

            @Thelaine is using the same argument that collaborators used when the Nazis occupied their countries. ‘Better that Paris be occupied than that it be bombed.’ ‘We have to keep the economy going’. “Things won’t be so bad.’ ‘The Germans will eventually leave.’

          • 0 avatar
            JimZ

            @Arthur I was thinking more along the lines of “Comical Ali.”

            en.wikipedia.org/wiki/Muhammad_Saeed_al-Sahhaf

          • 0 avatar
            thelaine

            Ahhh…sociopath and nazi. Very nice. Well done, gentlemen. You are upping the rhetorical ante, because you are starting to see that you may, in fact, be wrong. Nothing thing like a little panic and hysteria to bring out the nuclear-level invective. When you calm down, you may be able to fully re-evaluate.

            Actually, not every country deliberately impoverished their own workers in order to address this virus, and they are doing as well or better than countries that decided to castrate themselves in order to avoid getting the flu.

            The problem with your thinking is that you are so terrified of this virus that you are unable to weigh risk and see consequences. You are just running blindly like a resident of Tokyo fleeing Godzilla.

            We face viruses every single year, including flu viruses and sometimes even corona viruses. There is nothing about this virus that makes it an existential or apocalyptic threat. All of the models predicting unprecedented levels of mortality have proven to be grossly exaggerated an “dead” wrong. There is nothing uniquely deadly about coronavirus which should have caused us to destroy our economy.

            Many people believe as I do. And, everyday, more and more people are coming to realize that we have made a terrible error in shutting down the economy.

            If you cannot understand, or do not care about the effects of poverty, unemployment or welfare dependence, then you will never, ever understand the argument regarding risk management. Most of you who are shocked by this argument have no concept of poverty and really don’t give a sht about the poor because you have never been poor and never expect to be poor.

          • 0 avatar
            JimZ

            “Many people believe as I do.”

            *whistle*

            Personal foul, bandwagon argument. Agreeing with a bunch of people who are wrong makes you just as wrong.

            Reality is not a popularity contest.

  • avatar
    Art Vandelay

    Good. Whatever the cause…Screw em’

    • 0 avatar
      Arthur Dailey

      Ironic that collaborationist references were made in an article about Renault. Read about Louis Renault.

      And as far as nazi reference allegations? Instead references were made to Vichy collaborationist. Collaboration based on the premise of being a ‘nationalist’ and therefore protecting the French economy and culture. No ‘nazi’ reference. But then history and science and facts do not appear to influence some people or Russian bots.

      Sweden’s death rate is much greater per capita than Denmark’s and is growing.
      And Sweden’s population density, demographics and social practices/mores are considerably different than those of most other nations. Social distancing and spacing in particular.

      The lack of effectiveness of the lack of action taken by the American government is reflected in its death rates. Something that should not have occurred in ‘the richest nation on earth’.

      The major concern is still the possibility of overwhelming the health care systems. Social distancing, shutdowns and isolation have reduced the spread of the virus so that this has not happened. And healthcare facilities have been able to buy time to replenish PPE, and acquire much of the required equipment.

      Or in short; leave the decisions to those who are trained in these things.

  • avatar
    Art Vandelay

    Good. Whatever the cause…Skrew em’

  • avatar
    Lorenzo

    A big problem for all companies with joint ventures in China is that they can’t just pick up and leave. They may THINK they own the equipment in Chinese plants, but some companies have found that they can’t ship the equipment out of the country. They’ve been prevented from doing so by the Chinese government, claiming the Chinese company in the joint venture owns it.

    Just moving their operations out of China is going to be a real problem for companies, even with countries like Japan actually financing the exodus back to Japan or to other southeast-asian countries. China is not going to treat that exodus lightly, especially for industries with major capital investment in equipment, like the auto industry.

    • 0 avatar
      Superdessucke

      I’d look at that as a risk of doing business there and taking advantage of the cheap labor and lax environmental regulations. Too bad, and don’t bail ’em out.

    • 0 avatar
      TS020

      There’s a paper floating around written in the 70’s that detailed what it took for English companies to leave China in the 1950’s. It took from 1949 to 1957 to do it and there was a LOT of screwing around and wasted money. I have no doubt it would be the same today.

  • avatar
    Superdessucke

    Thank you Renault. Thank you.

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