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Apr. 14 (NBD) -- French carmaker Renault plans to transfer the 50 percent stake in its China joint venture to Dongfeng Motor Corporation ("Dongfeng Motor") due to poor sales, the Chinese automaker announced on Tuesday.

The two sides have signed a non-binding agreement, under which the JV, Dongfeng Renault, will stop Renault-branded activities after the transaction, and Dongfeng Motor plans to "transform and upgrade" the JV based on its overall strategy.

It's noticed that the JV sold only 18,607 cars in 2019, an year-over-year decrease of 63 percent. The situation was exacerbated by the COVID-19 outbreak, which dealt a heavy blow to the auto industry worldwide. It also happens that Dongfeng Renault is located in virus-hit Wuhan, which led to production suspension for over two months. In the first three months of 2020, Dongfeng Renault sold a mere 663 cars, plummeting by 88.65 percent compared with the same period of last year. 

However, the partnership between Dongfeng Motor and Renault will not end after the latter withdraws from the venture. They will strengthen their cooperation with Nissan on new generation engines, including components supply to Dongfeng Renault and diesel engine license to Dongfeng Automobile Co Ltd, a JV between Dongfeng Motor and Nissan.

Dongfeng Motor and Renault will also cooperate in the intelligent connected vehicles sector.

As Renault emphasized, the stake transfer does not mean its exit from the Chinese market. In a new strategy published on Tuesday, Renault said its China operations will focus on electric vehicles and light commercial vehicles, which will be carried out by Renault's three other JVs in the country.

Email: gaohan@nbd.com.cn