SHANGHAI – French automotive supplier Faurecia and Dongfeng Hongtai, a majority-owned subsidiary of Dongfeng Motor Corp., signed a partnership agreement on March 27 to form a joint venture to develop, produce and sell automotive interior and exterior components, according to a Faurecia news release.
The JV will serve Dongfeng and its automotive partners for passenger and commercial vehicles and, when fully deployed, will cover all of Faurecia’s businesses. The partners expect the JV to realize annual sales of around €2 billion ($2.16 billion) in the medium term.
The JV is expected to complete registration by the end of May and has already been awarded important business from Dongfeng-Peugeot-Citroën Automobile (DPCA) for vehicles to be built in Chengdu, Sichuan Province.
The partnership will in the future be extended to include automotive seating and emissions control technologies. It will develop its footprint in all regions of China where Dongfeng and its automotive partners are present. A new R&D center will be established in Wuhan, Hubei Province supporting the JV in product and program development, testing and validation.
Faurecia and Dongfeng have agreed on a governance and general management scheme allowing Faurecia to fully consolidate the business of the JV. Initially, the exterior business will be consolidated by Faurecia on an equity basis.
“This new joint venture agreement with Dongfeng represents a major step forward in Faurecia’s relationships with its Chinese customers. We will support Dongfeng and its partners in their development of strong automotive brands with leading-edge vehicle technologies and expertise. Faurecia has grown extremely rapidly in China and has doubled its sales over the past three years, significantly outperforming the growth of the Chinese automotive market. This new partnership with Dongfeng, which is complementary to the existing cooperation with Chang’an Automobile Group implemented in 2013, will contribute to the steady and profitable growth of Faurecia in China,” said Yann Delabrière, Chairman and CEO of Faurecia.
Faurecia has been operating in China for over 20 years and considers the Chinese market a major priority. It currently employs 12,000 people, including 800 engineers and is present in all the main automotive regions in China. In 2014, sales in China reached €2.23 billion, up 20 percent over 2013. The group now operates 38 factories as well as three R&D centers, and targets the operation of 55 plants by 2018. It expects annual sales in China to more than double to over €4 billion by 2018.