Renault, Dongfeng near $1.8 bln car joint venture -Report

France carmaker Renault SA (RNO.FR) may this month sign a deal with Dongfeng Motor Group Co. (0489.HK), China's second-largest auto company by sales, to set up an 11 billion yuan ($1.8 billion) joint venture, the China Business News reported Monday, citing a person familiar with the deal.

The car manufacturing joint venture has gotten approval from China's supervisor for state-owned assets, the State-owned Assets Supervision and Administration Commission. State-controlled Dongfeng also makes cars with PSA Peugeot Citroen, Nissan Motor Co., Honda Motor Co. and Kia Motors Corp.

The planned joint venture will be set up through a restructuring of an existing venture between Renault and China Sanjiang Space Group, said the report.

The Renault-Sanjiang alliance started in 1993, making Renault's Traffic minibus in China. The French carmaker owns a 45% stake in the venture. Production was suspended in 2004 due to poor sales performance, and Dongfeng and Renault have since then been in talks on a potential tie-up, said the report.

The report said Dongfeng would acquire Sanjiang's 55% stake in the Renault-Sanjiang project, and the restructured joint venture will be based in Wuhan, capital of central Hubei province and where Dongfeng's headquarters are located.

Carlos Tavares, chief operating officer in Renault, said last month that the company is considering selling electric vehicles in China through its planned joint venture with Dongfeng, as it seeks to expand in the world's biggest car market by volume.

Chinese government documents show that the Dongfeng-Renault project will have annual production capacity of 150,000 passenger vehicles, including sports utility vehicles and multi-purpose vehicles, and will have an initial investment of 7.2 billion yuan.

Officials at Dongfeng weren't immediately available for comment, while Renault said the deal with Dongfeng is still awaiting final approval from the Chinese authorities.

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