Author | Caijing New Media Ming Hao
Edit | Jiang Shizhou
Going round and round, a scene from 25 years ago is now happening again.
On February 8, a number of media reported that the second plant of Dongfeng Honda, which has been idle for a long time, has been taken over by Dongfeng Honda, which will transform the plant into a new factory specializing in the production of pure electric vehicles.
At present, the heads of the brands of both sides have basically confirmed the accuracy of the information, and after the completion of the transformation, the former "Shenlong Second Factory" will become Honda's first new energy benchmarking factory in the world.
25 years to reincarnate
In 1997, 25 years ago, Guangzhou Peugeot, which was once very popular, officially declared bankruptcy due to the decline in sales due to poor product updates and long-term no increase in localization rate. At that time, at a symbolic price of $1, the company that bought Peugeot's shares and debts in China was Honda, and the rise of Guangzhou Honda after that is undoubtedly a more familiar story for the public.
Five years after exiting the Chinese market in 1997, Dongfeng Peugeot, a Sino-French cooperation company, was formally established in 2002 and officially introduced DPCA. However, after 20 years of development, Dongfeng Peugeot and its own DPCA have encountered the same fate - to sell the factory to Honda.
In fact, as one of the protagonists of this time, the Shenlong Second Factory can be described as having a long history. The foundation stone of the second factory, one of the four major factories under the umbrella of Shenlong, was laid on October 27, 2006, and even French President Jacques Chirac, who visited China at that time, personally laid the foundation for the factory to lay the foundation and plant trees. In 2009, the second plant was officially completed with an annual production capacity of 150,000 units, and previously mainly produced Peugeot 508 and Citroën C5, C6 and other models.
DPCA has four production bases in China, of which the first, second and third plants are located in Wuhan, Hubei Province, and the fourth plant is located in Chengdu, Sichuan, with a planned annual production capacity of 300,000 vehicles, 150,000 vehicles, 300,000 vehicles and 360,000 vehicles respectively, with a total production capacity of more than 1 million vehicles. Considering that the total wholesale sales of DPCA Automobile in 2021 will only be 100,500 units, this means that nearly 90% of the planned production capacity of DPCA automobiles is idle, and a large number of idle production capacity is a literal negative asset for both China and France in the joint venture, which needs to be dealt with urgently.
It is also true that as early as August 2019, there are relevant documents showing that DPCA is ready to relocate the first plant to the third plant as a whole, the first plant will be acquired by the government, the second plant will be sold as a whole together with the equipment, and the potential buyers are Dongfeng Nissan and Dongfeng Honda. Since DPCA began to promote the internal production capacity layout adjustment plan codenamed F99, the second plant of DPCA Automobile has been basically idle.
As for the relevant reports that DPCA wants to transfer the second plant to Dongfeng Honda, it has appeared as early as 2017, and such news has often appeared in our field of vision in the past few years. According to relevant documents, the Wuhan Economic Development Zone has helped DPCA deal with idle production capacity from 2020, shrink the assets of DPCA and complete land regulation to meet the conditions for listing and transferring commercial land, which means that the transfer of the second plant of DPCA automobile has cleared the obstacles, only for the final buyer to appear.
Why is it Honda who took over the order?
Compared with the overcapacity and idle plant of Dongfeng Honda, Dongfeng Honda has obvious production capacity shortage.
At present, Dongfeng Honda has three plants, all located in Wuhan, with an overall planned annual production capacity of about 768,000 units. In the three years from 2019 to the present, Dongfeng Honda's sales reached 800,000 units, 850,000 units and 790,000 units, respectively, while the annual production in 2019 and 2020 also reached 791,000 units and 840,000 units, respectively, which can be described as overloaded production capacity.
At the same time, with the rapid development of new energy vehicles, the huge domestic new energy vehicle market has attracted a large number of car companies to start electrification transformation, and Dongfeng Honda is naturally no exception. According to Honda China's electrification strategy previously released, Dongfeng Honda will have a number of new energy models on the market in the future. For example, the first model of Honda's new pure electric brand "e:N", e:N, will be put into production at Dongfeng Honda and will be officially launched this spring. According to the previously released data, this model is positioned as a compact pure electric SUV, the size will be basically the same as the Dongfeng Honda XR-V, and the comprehensive mileage of the two versions of CLTC is 420km and 510km respectively.
It is reported that in the next five years, Dongfeng Honda will launch three e:N brand electric models. For Dongfeng Honda, whose production capacity is already stretched, such a large transformation plan, it is unrealistic to expect to upgrade the capacity of the original factory, and it is unacceptable to divert valuable existing capacity to produce new energy vehicles, and only new factories are a better choice.
On January 5, 2022, Dongfeng Honda signed an investment agreement with Wuhan Economic Development Zone for a new electric vehicle plant project to build a new plant specializing in the production of electric vehicles. According to the contents of the announcement, the total investment of the new plant is about 10 billion yuan, the plant covers an area of 630,000 square meters, the initial production capacity is 120,000 vehicles, and the total planned annual production capacity is 256,000 units, and it is planned to start official production in 2024.
For Dongfeng Honda, the electrification transformation and layout of new energy vehicles are on the one hand to further realize the upward development of the brand, on the other hand, it is also to get rid of the current situation that the sales volume in the field of traditional fuel vehicles has been "suppressed" by Guangqi Honda. Therefore, the acquisition of the second factory of Shenlong is also to some extent a demonstration of the determination of the electrification transformation. Today, with the completion of the acquisition of the second plant of Dongfeng Honda, dongfeng Honda's electrification transformation will be further, and the future e:N brand electric vehicles will also be produced, rolled off the production line and marketed on the land that once carried DPCA.
What is the future of DPCA?
Selling long-term idle capacity is also a good thing for DPCA, which is striving to achieve brand rejuvenation.
From the all-time high of 704,800 units in 2015, the market performance of DPCA has been all the way down, and by 2020 it has fallen to only 50,200 units, only about 7% of the peak period.
Faced with such a dilemma, DPCA began to actively save itself, launching the "Yuan" plan and the "Yuan +" plan. Judging from the total wholesale sales of 100,500 vehicles in 2021 and the year-on-year growth of 100.07%, the new plan has indeed brought certain improvements and changes.
Among them, since the listing of Dongfeng Citroen Versailles C5 X in September 2021, more than 12,000 vehicles have been successfully delivered in just one quarter, surpassing dongfeng Citroen Tianyi C5 AIRCROSS and becoming a new sales "handle". The hot sales of the Versailles C5 X have also increased the overall share of French cars in the domestic passenger car market from 0.3% in 2020 to 0.6% in 2021.
After 5 consecutive years of declines, DPCA has finally achieved a rebound in sales, which means that it has achieved phased results in "open source". After the transfer of the second plant of DPCA, DPCA currently retains only the third factory in Wuhan and the fourth factory in Chengdu, and the production capacity will be further reduced to 660,000 vehicles.
In addition to "open source throttling", Shenlong is also making positive adjustments in terms of organizational structure. Recently, it was revealed that DPCA will carry out a major adjustment in 2022, splitting and developing its two brands of Peugeot and Citroen, among which Dongfeng Peugeot is led by the French side, Dongfeng Citroen is led by the Chinese side, and DPCA will be retained as a production base, and the shareholding ratio between China and France will not be adjusted. Dongfeng internally refers to this new architectural form as the "two-bedroom, one-hall" model.
Dongfeng Peugeot and Dongfeng Citroen developed independently and each "flew alone", which also pressed the pause button for DPLU's "dual-brand store" strategy. In 2019, in order to achieve the dual-brand synergy development strategy, DPCA merged its Dongfeng Peugeot and Dongfeng Citroen 4S stores in order to achieve the purpose of reducing costs and rapidly rolling out the network, but it also brought about problems such as increased difficulty in terminal management, increased brand management costs, and uneven competition between dual brands, and failed to achieve large-scale promotion. It is reported that in the future, DPCA will no longer build new dual-brand stores, and the existing dual-brand stores will be retained.
After their respective "solo flights", Dongfeng Peugeot and Dongfeng Citroen will continue to move forward in accordance with the most correct path that their respective shareholders believe, which will undoubtedly effectively shelve the controversy and accelerate the exploration of the future development path of the two brands. As the first passenger car joint venture in the history of Dongfeng Group, DPCA was established in 1992, which may also be the best arrangement.
How to stand on the basis of 100,000 vehicles in 2021 and continue to rejuvenate and move towards the next decade is undoubtedly the most difficult and urgent problem in front of this veteran car company that is about to celebrate its 30th birthday. The road ahead is long and difficult, and the dragon still needs to work hard.