[BEIJING] Renault and China’s Chery Automobile are in talks to partner on carmaking and sales in South America as both manufacturers pursue growth in the region, according to sources familiar with the matter.
The discussions include plans for Colombia and Argentina, where Chery would get access to Renault’s existing factory network in return for providing capital and product design, said the sources, who asked not to be named because the deliberations are private.
The Chinese automaker would use Renault’s plant in Envigado, Colombia, to make combustion-engine cars, with the majority re-badged under the Renault brand and the remainder sold as Chery vehicles, the sources said.
At Renault’s Cordoba factory in Argentina, Chery is considering investing in a plug-in hybrid pickup truck line, with Renault to serve as the general distributor for the vehicles, they added. Talks are ongoing, and it’s not certain that a deal will be signed.
A Renault spokesperson declined to comment. Representatives for Chery didn’t respond to a request for comment.
Renault has been pursuing partnerships to bring costs down while tapping into growth markets. In Brazil, it’s working with China’s Zhejiang Geely Holding Group on making and selling electric models and other low-emission vehicles. Working with Chery would not affect the Geely projects, the sources said. Chery’s interest has intensified since its successful Hong Kong trading debut last week, they added.
The talks started under Renault’s former chief executive officer Luca de Meo, the sources said. His successor, Francois Provost, is understood to have adopted a more cautious stance on spending than De Meo, who had backed co-funding the South American expansion, the sources said. As per the latest discussions, the Chinese company would fully fund the projects, they added.
Chery, which has remained China’s top car exporting brand every year since 2003, according to Frost & Sullivan, has experience working with Western companies. It assembles Jaguars and Land Rovers in China and has plans to grow overseas amid tough competition at home. Its lineup has a high proportion of relatively affordable fuel-powered vehicles, making them well-suited to emerging markets. BLOOMBERG
