Dongfeng is China's second-largest automaker.
Renault is preparing to form a joint-venture with China's Dongfeng Motor Group, a new report indicates.
Under the rumored arrangement, Renault and Dongfeng will invest a total of 6.5 billion yuan (roughly $1 billion) to build a new factory in central China that will be able to churn out about 200,000 cars as year. When the factory will open its doors is not known.
Joint-ventures typically take a long time to be approved by the Chinese government but Renault is expected to have a slightly easier time because it already formed a joint-venture with a Chinese company in the middle of the 1990s.
Renault hopes that producing locally will enable it to sell cars at a more competitive price and gives it sales a much-needed boost. Currently, the French automaker imports cars from abroad so it has to pay expensive tariffs which are inevitably passed on to buyers.
Both Dongfeng and Renault declined to comment on the matter. If the rumor proves true, an official announcement about the joint-venture will be made before the end of the year.
Dongfeng is China's second-largest automaker and it already has joint-ventures set up with Nissan, Honda and Peugeot, one of Renault's fiercest rivals.