French car giant Renault has scrapped its joint venture with Chinese firm Dongfeng Motor Group due to weak sales at the loss-making partnership.
A general slowdown of sales in the world’s biggest auto market will be compounded by this year’s coronavirus pandemic, which has led to a widespread shuttering of factories and showrooms across the world.
Renault entered the partnership in 2013 but is now seeking to make the most of its alliance with Japanese giant Nissan, which has been on rocky ground in recent years.
A source told Reuters that Dongfeng had been expecting the decision from Renault for about a year, with sales under considerable pressure even before the coronavirus crisis.
The venture sold only 18,607 cars in 2019, far below its annual capacity of 110,000 and reported an operating loss of more than 1.5bn yuan (£168.3m).
Dongfeng will acquire Renault’s 50 per cent stake in the partnership and revamp the business, no longer making Renault branded vehicles.
The French carmaker will maintain a presence in the Chinese market through other interests such as electric and light commercial vehicles.
Francois Provost, Renault’s chairman for the China region, said: “We are opening a new chapter in China. We will concentrate on electric vehicles and light commercial vehicles, the two main drivers for future clean mobility and more efficiently leverage our relationship with Nissan.”
The Nissan – Renault alliance is set to provide a strategy update in May.
Relations between the two partners, who both recorded losses in 2019, have been strained by the arrest and subsequent flight of former Nissan executive Carlos Ghosn in 2018.