Dongfeng Volvo succeeded in research and analysis in 2013

Recently, after seven years of running, Dongfeng and Volvo finally signed an agreement on joint ventures in Beijing. The two parties agreed that they will establish a strategic alliance based on capital and jointly develop the “Dongfeng” brand commercial vehicle.

The signing of this agreement is undoubtedly even more powerful for Dongfeng Commercial Vehicles, which will soon be "China No. 1 and No. 3 in the world." Xu Ping, chairman of Dongfeng Group, said, “By establishing a strategic alliance for commercial vehicles, the two parties will achieve a win-win situation. What's more important is to accelerate the internationalization of the Dongfeng brand commercial vehicles and comprehensively increase the core competitiveness of the Dongfeng commercial vehicle business. ”

Establish strategic alliance

The alliance’s establishment model is that Dongfeng Group will first repurchase the mid- and heavy-duty commercial vehicle business and assets from Dongfeng Motor Co., Ltd., a joint venture with Nissan Motor Co., Ltd., and then the majority of its business and assets will be transferred to Dongfeng Group and Volvo Group. The new Dongfeng Commercial Vehicle Company, in this commercial vehicle joint venture, Dongfeng Group and Volvo Group will hold 55% and 45% of the shares, respectively.

According to the agreement, Volvo truck output technology and standards, Dongfeng commercial vehicle is responsible for providing manufacturing capabilities.

The new company established by both parties will be committed to developing the Dongfeng brand medium and heavy commercial vehicle related business. The brand will be licensed by the Dongfeng Motor Company to the new company. The business products include medium- and heavy-duty trucks and chassis, large and medium-sized buses and chassis, special vehicles (including construction vehicles), engines, gearboxes and other key components, as well as technical consulting, technical services, and after-sales services related to the joint venture's operating projects.

At present, Dongfeng Commercial Vehicle Co., Ltd. belongs to Dongfeng Limited, a joint venture between Dongfeng and Nissan. It is expected that with the finalization of the Dongfeng Volvo project, Dongfeng will spin off the commercial vehicle segment from Dongfeng to achieve in-depth cooperation with Volvo.

At the signing ceremony, the president and CEO of the Volvo Group Europa Pesson said, "The signing of both parties is a historic moment and a milestone event. This cooperation will constitute a formidable alliance," he said. : "Dongfeng Group is a partner we have been familiar with for many years. We greatly appreciate their management team and product line. Through cooperation, the advantages and synergies of both parties will be leveraged to further strengthen the Volvo Group's international competitiveness."

In addition, Europassen admitted that China is the market that the Volvo Group dreams of, and this cooperation will accelerate Dongfeng's “going out” and will also accelerate Volvo’s “walking in”. He expressed "extremely optimistic" about the future prospects of the new company.

Create a new joint venture model

According to the agreement signed by both parties on January 26, after the joint venture, the board of directors of the new Dongfeng Commercial Vehicle Company will consist of seven persons, of which four are appointed by Dongfeng, three are appointed by Volvo, the chairman is appointed by Dongfeng Group, and the vice chairman is appointed by Volvo Group. The initial stage of the company's management layer consists of eight people, Dongfeng and Volvo each recommend four, Dongfeng Fang recommended general manager, and Volvo Fang recommended financial vice president.

“The company’s chairman is Zhu Fushou, executive director and president of Dongfeng Group.” According to sources, Dongfeng Group has taken a dominant position in this joint venture in terms of equity ratio, composition of the board of directors and other aspects.

According to the plan, the new joint venture company will be located in Shiyan, Hubei, producing Dongfeng brand commercial vehicles. Zhu Fushou stated that the first step of the joint venture will be me. In addition to upgrading existing existing resources, it will share Volvo's advanced gearbox and other technologies. In the second step, the two parties will jointly develop and meet the European emission standards. Global platform.

It is worth noting that because the new joint venture company is controlled by Dongfeng and Dongfeng brand commercial vehicles are produced, Dongfeng can make consolidated statements on the profits of the joint venture company.

According to statistics, the Volvo Group is currently one of the world's largest suppliers of commercial transportation products. The objective of Dongfeng Commercial Vehicles in 2013 is “the balance is flat”, that is, while the major market is declining, Libao’s sales and market share of heavy-duty trucks is not lower than that of 2012, which is not less than 180,000 vehicles and 20% respectively. Maintain the industry first.

According to the data released by Dongfeng, in 2012, Dongfeng’s own-brand commercial vehicles achieved sales of 606,000 vehicles, which continued to maintain the domestic leading level in the industry's continuous downturn test, and sales of medium and heavy trucks ranked first in the industry for nine consecutive years.

Joint venture outlook cautiously optimistic

While Dongfeng and Volvo both praised the joint venture, observers at home and abroad are not optimistic about this “marriage”.

Among them, one of the important reasons is that they are not optimistic about the heavy truck market in China. For the Chinese commercial vehicle market in 2013, Goldman Sachs predicted a growth of 6%, and the forecast of automotive information company LMC was relatively optimistic, at 10%, but the company also stated that even if it increases by 10%, the sales volume of heavy-duty commercial vehicles will reach 70 in 2013. Ten thousand vehicles still failed to reach the annual sales of one million in 2010.

In addition, “multinational automotive companies will provide Chinese companies with market and technology leading knowledge, which also means that the advantages of multinational automotive companies will no longer exist.” The US “Wall Street Journal” recently published article on foreign cars The company's commitment in the joint venture expressed concern.

As the Chinese government tightens the mining industry and China's increasingly stringent emission standards will seriously affect the sales of commercial vehicles. At the same time, Goldman Sachs expressed concern about the use of heavy trucks in China. According to a company’s statistics, there are 4.6 million heavy trucks in China, but the actual number of trucks in use is only 50%. On the contrary, the United States has 2.3 million heavy trucks, but the utilization rate is as high as 90%.

“But we have to admit that Dongfeng Commercial Vehicles has also encountered the ceiling of development.” Li Ziliang, deputy director of consulting at the Zero Research Group Automotive Research Center of Beijing, analyzed that “they are no longer satisfied with the production of products suitable for the Chinese market. It is a model that meets world standards.”

"China's commercial vehicle overcapacity problem has been placed in front of us." Zhu Fushou frankly said: "Dongfeng company is starting from the medium and heavy commercial vehicles. Therefore, how to make the Dongfeng medium and heavy commercial vehicles go international, has always been our long-term thinking."

Cui Dongshu, an automotive analyst, believes that although Dongfeng is a leading company in the domestic commercial vehicle industry, it still can not bypass the joint venture in the process of further technological upgrading and internationalization. "Joint ventures can quickly make up classes."

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