Chinese car maker Dongfeng and France's Renault will set up a joint venture to produce multiple-purpose vehicles and engines, the Chinese firm said on Thursday.

Total investment for the joint venture has reached 7.75 billion yuan (about 1.26 billion U.S. dollars). It will produce 150,000 multiple-purpose vehicles and engines annually, according to Dongfeng Motor Group Company Limited.

The deal has been approved by China's National Development and Reform Commission.

The two companies will restructure Sanjiang Renault Automotive Co., Ltd, which will operate under the name Dongfeng Renault Automotive Co., Ltd. The joint venture has a registered capital of 111.2 million U.S. dollars.

During the transitional period, Dongfeng will hold a 55 percent share of the joint venture with Renault holding 45 percent. After capital increase, Dongfeng and Renault will each hold a 50 percent share.

Dongfeng said the joint venture will develop and produce high-quality vehicles to transform itself into a globally competitive car maker.

Based in Wuhan, capital of central China's Hubei Province, Dongfeng Motor Group gained about 11.2 percent of the total sales volume of domestic commercial and passenger vehicles in 2012.