Dongfeng Challenges 3 Million Sales Target Has Been Adjusted to 2019


There are 3 million vehicles, 2.47 million vehicles, 2 million vehicles and 1 million vehicles, which are the targets of the auto sales of Dongfeng, Chang’an, FAW and SAIC respectively planned to sprint during the “13th Five-Year Plan” period.

From joint ventures to autonomy, the four major auto groups launched a new round of races. However, the growth rate of the Chinese auto market is slowing down, which will increase the uncertainties of the future development of these auto makers. Dongfeng and FAW will change their coaching positions, adding to the complexity of the future competitive landscape.

Slow down the pace

The annual sales volume of its own brand of 3 million vehicles is one of the goals that will be challenged after this month’s tying off the wind.

According to Dongfeng’s previously announced Dongfeng independent brand “Qian” D300 (Dongfeng's own brand mid-term business plan for 2012~2016), Dongfeng’s self-owned brand sales volume in the year ending in 2016 was 3 million units, of which the Dongfeng brand was used commercially. There are 1 million cars, 1 million Dongfeng brand passenger cars and 1 million other independent brands. If 3 million vehicles are scheduled to be realized on schedule, Dongfeng’s autonomous car sales will come out on top of the Big Four auto groups.

However, the reporter recently learned from the insiders of Dongfeng Automobile that the development of autonomy will be one of the key aspects of the Dongfeng “13th Five-Year Plan”. However, the time point for achieving the sales target of 3 million vehicles has been adjusted to 2019.

In 2014, Dongfeng's own branded car sales were 1,277,800, ranking the top three in the industry, of which sales of narrowly-owned passenger cars of its own brand were 615,000. Although the growth rate of Dongfeng's self-owned brand cars is higher than that of the industry, it is extremely difficult to double the sales volume of self-owned brands within the next two years in the face of a slowdown in the auto market in China and intensified competition. For Dongfeng to proactively postpone its 3 million auto sales targets, the industry believes this is more realistic.

Not only Dongfeng, but Changan, which has the most rapid development in its own field, is also adjusting its pace. Last year, Changan Automobile sold 2.54 million vehicles, of which the narrow-sale passenger vehicle business of its own brand achieved sales of 769,000 vehicles, an increase of 39.4% year-on-year. In the first quarter of this year, thanks to the rapid development of self-owned brands, Chang'an sales surpassed FAW in one fell swoop, taking third place seats, and even sales in February surpassed Dongfeng as a single-month runner-up. In the first quarter of this year, Changan sold 800,000 cars, of which 319,200 were self-owned brand passenger cars, an increase of 51% year-on-year, accounting for 40% of total sales in the first quarter. Sales volume remained the No. 1 brand in China, leading the Chinese brand continued to strengthen . According to the data released by LMC Automotive, the sales of Chinese auto brands in the first quarter of 2015 were reshuffled. Among the top 20 passenger car brands and 10 commercial vehicle brands with the highest sales in China, most of the self-owned passenger car brands were sold. Jin Zengsheng, China's own domestic brands occupy 8 seats, of which Changan's performance is the most eye-catching, ranking second only to the public.

However, in the case of rapid performance, Chang'an's sales this year and the "2020" vision are still lower than originally planned.

In November 2012, Changan announced on the company’s 150th anniversary that Chang’an’s goal is to reach a scale of 4 million units in 2015 and strive to reach a scale of 6 million by 2020, 60% of which is an independent brand. The product. However, Changhua Automobile President Zhu Huarong recently told reporters during an interview at the Shanghai Auto Show that Chang’an’s sales target for this year was 2.9 million units. The reporter recently confirmed with relevant insiders from Chang'an that the new “2020” vision of Chang’an Automobile is to realize sales of 4.5 million vehicles, of which 2.47 million are autonomous vehicles. This means more than a million cars are reduced compared to the original 2020 plan.

FAW, which is known as "the eldest son of the republic," had net assets of 1,531.16 billion yuan in 2014, total operating revenue of 487.948 billion yuan and total profit of 59.307 billion yuan, which is not compared with the largest domestic listed car company SAIC. In contrast, FAW was even slightly better at the two key indicators of net assets and total profit. However, this brilliant transcript was mainly supported by "cash cows" such as FAW-Volkswagen and FAW Toyota, and the development of self-owned brands has been criticized.

At the Beijing Auto Show five years ago, Xu Jianyi, general manager of China National Automobile Industry Corporation, gave a rhetoric. In 2015, the sales of FAW vehicles will exceed 4 million by 2015, of which the proportion of self-owned brands will exceed 50%, that is, 2 million. More than one vehicle. However, in March this year, FAW Chairman Xu Jianyi was suspected of serious violations of laws and regulations. The dismissed FAW leader was accused of red flag strategic decision making and forced Xiali to despair. According to statistics from China Netcom, FAW’s autonomous passenger car sales amounted to 238,000 vehicles last year. The two million independent brand sales target FAW originally planned to complete this year will be postponed by five years. Xu Xianping, general manager of FAW Group, said in an interview with the media before that that in order to complete the 2 million self-owned sales in 2020, FAW will launch 18 self-produced products in the next five years to ensure the realization of the target.

Need to improve

Although in the course of years of joint ventures with multinational car companies, the sales scale and profit of the four major auto groups have shown rapid growth. However, this is mainly driven by joint venture brands, brand strength, technology, single vehicle sales and management of independent brands. There is still a certain gap between the other aspects and the joint venture brand.

From 33.8% to 28%, the automaker’s market share in the domestic market has fallen by more than 5 percentage points over the past five years. Although it seized SUVs and MPV hot spots, the market share of self-owned brands has rebounded to 33% in the first quarter of this year, but can Stabilization is still unknown. For the four major groups, expanding the scale of sales of self-owned brands and increasing profitability have become imperative.

FAW has its own brands such as Liberation, Red Flag, Pentium, and Xiali, but the red flag built by FAW Heavy Gold has not yet been improved. In 2013, FAW Car sold 2984 red flag series cars; in 2014, the sales volume of red flags was 2721 cars, a year-on-year decrease of 8.8%. As the flag of the FAW Group’s own brand, the Hongqi sedan, the first Hongqi H7 model for the public, sold only 2,708 vehicles in 2014. The predicament facing FAW in its own field is that, on the one hand, the red flag series is lacking in rejuvenation, and on the other hand, Xiali is still deeply in the midst of huge losses. Dragged by the Xiali brand, ST Xiali reported a loss of 1.659 billion yuan in 2014, a drop of 245.71%.

When interviewed by an expert, Zhang Zhiyong, an automotive expert, spoke of the fact that FAW's lack of self-reliance has a bearing on the positioning of Hongqi and the unscientific assessment of management. Xu Ping, the former head of Dongfeng, was considered to be directly facing the 2 million autonomous examination after the chairman of any steamer. Xu Ping led the "grand autonomy, big synergy" strategy during Dongfeng's tenure and made many remarkable achievements. Xu Ping will be concerned about how FAW's autonomous planning will take place.

SAIC Motor, which ranks as the champion in terms of sales volume, is somewhat similar to FAW. It relies too much on Shanghai Volkswagen, Shanghai GM and other joint ventures, and its autonomy segment is still a “soft rib”. In 2014, SAIC's total operating revenue was 630 billion yuan, net profit attributable to shareholders of listed companies was 27.793 billion yuan, and more than 5.62 million vehicles were sold. However, in the huge sales scale, SAIC's own-brand passenger vehicles have contributed less than 200,000 vehicles, and they have not been able to achieve profitability. The main reason is that the new product launch time is too slow and the core technology has not been able to fully break through. At present, SAIC Motor accelerates the investment in self-owned brand passenger vehicles and the development of new energy vehicles. According to SAIC's plan, by 2020, new energy vehicles will assume 200,000 of the 1 million autonomous sales tasks.

For Changan, who has won the championship of independent sales, although sales volume has risen rapidly, its own profitability has remained weak. In 2014, Changan Automobile's operating income was 52.913 billion yuan, a year-on-year increase of 35.18%, and the net profit attributable to shareholders of listed companies was 7.561 billion yuan, an increase of 124.46% year-on-year. However, this is mainly due to the net profit contributed by joint ventures such as Changan Ford and Changan Mazda. According to the company’s public financial data, only two joint ventures, Chang’an Ford and Chang’an Mazda, contributed 7.2 billion and 500 million yuan of net profit to Chang’an respectively, which means that Chang’an’s own brand segment remained unrealized last year. profit.

Zhu Huarong said: “The investment in our own brand business in R&D and branding has increased year by year over the years. If we want to generate profits, it is also possible. However, in order to consider long-term benefits, we have more funds in the moment. We will also improve the profits of our own brands year by year. We believe that everyone will see it in the future. I feel very confident that all of this is controllable."

In 2014, Changan Automobile incurred Rmb2.012 billion in research and development projects, accounting for 3.80% of the operating income for the year. In recent days, Changan has raised 6 billion yuan, mainly to enhance the competitiveness of its own-brand passenger car business and enhance the core technical capabilities of its close-knit parts. In Zhu Huarong's view, the average bicycle sales volume of self-owned brand general passenger vehicles is 25,000, while the sales volume of a Ford Focus model is a million, and the future of self-owned brands must build a single platform of 300,000 to 400,000 vehicles as soon as possible. And models, otherwise do not have the ability to compete with the international market.

Dongfeng and Changan are relatively close to each other in their own strengths. Dongfeng does not hide its ambition to catch up with Changan on its own. It plans to sell 3 million autonomous vehicles in 2019, which is 2.7% more than Changan's 2020 sales plan. It is 500,000 more. At present, among Dongfeng’s three self-owned sub-brands: Fengshen, popular, and demeanor, Dongfeng has caught on with SUVs and MPV hotspots, and its sales volume has grown rapidly in recent years. However, Dongfeng Fengshen failed to achieve profitability for many years. At present, Dongfeng is increasing its support for Dongfeng Fengshen. This year, it created a joint venture model for self-owned OEMs and integrated the resources of joint venture Shenlong's technology research and development to support the development of Dongfeng Fengshen.

With the intensification of competition, the major car companies are not necessarily rivals, but they may also form alliances. Previously, the industry passed a merger between FAW and Dongfeng. Although both FAW and Dongfeng have denied this, there is little possibility of their merger. However, it is not possible to exclude cooperation between the two parties in their own brands. On May 5, Dong Yang, executive vice president and secretary general of the China Association of Automobile Manufacturers, pointed out at the second meeting of the China Passenger Car Brands Association Summit held at Dongfeng Headquarters that despite starting from the fourth quarter of last year, In the first quarter of this year, the overall decline in the share of Chinese branded passenger vehicles has stopped, but the situation is still grim. This requires the Chinese brands of passenger vehicles to unite to seek new development.



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