Dongfeng Group released its 2021 financial report: the commercial vehicle business declined, and the future will focus on the independent passenger car business

21st Century Business Herald reporter Du Qiaomei reported that on the evening of March 29, Dongfeng Motor Group Co., Ltd. (0489. HK, hereinafter referred to as Dongfeng Group) released its 2021 financial report.

According to the financial report, affected by the shortage of global chip supply, dongfeng group shares will achieve sales of about 2.7751 million units in 2021, according to the statistics released by the China Association of Automobile Manufacturers, according to the total sales of domestic commercial vehicles and passenger cars, Dongfeng Motor Group's market share in 2021 is about 10.6%.

Among them, the overall sales of passenger cars was about 2.2525 million units, a year-on-year decrease of about 2.6%, and the sales of the joint venture passenger car business were about 1.8751 million units, a year-on-year decrease of about 8.8%; affected by the switch of national regulations and the decline in industry demand, Dongfeng Motor Group's commercial vehicle sales were about 522,600 units, a year-on-year decrease of about 5.8%.

However, the new energy business achieved explosive growth, with sales of about 160,600 units, an increase of about 263.3% year-on-year. Among them, the sales volume of new energy passenger vehicles was 143,300 units, an increase of about 313.8% year-on-year, and the sales of new energy commercial vehicles were 17,300 units, an increase of about 80.8% year-on-year.

In terms of finance, dongfeng group's share income in 2021 was about RMB113.008 billion, an increase of approximately RMB4.567 billion or 4.2% from RMB108.441 billion in the same period of 2020, and profit attributable to shareholders was approximately RMB11.387 billion.

Despite the growth of both revenue and profit, for a long time, the pattern of Dongfeng Group's excessive dependence on joint venture brands and commercial vehicle business has not changed, and the autonomous passenger car business still needs to be strengthened.

Commercial vehicle business declined

According to the financial report, the revenue growth of Dongfeng Group mainly came from passenger car companies, Dongfeng Citroen, Dongfeng Liuqi, Lantu and Dongfeng Finance Company.

Among them, the sales revenue of the passenger car business was approximately RMB32.548 billion, an increase of approximately RMB15.607 billion, or 92.1%, from approximately RMB6.941 billion in the same period of 2020. Sales revenue from the commercial vehicle business was approximately RMB71,250 million, a decrease of approximately RMB12,302 million, or approximately 14.7%, from approximately RMB83,552 million for the same period in 2020. Dongfeng Group said that the decrease in revenue from the commercial vehicle business was mainly affected by the switch of China VI regulations and the decline in industry demand.

"In 2021, the development of the domestic automotive industry has been greatly challenged, the new crown epidemic continues, the shortage of automotive chips, the rise in raw materials for bulk commodities and other issues have a great impact on the automotive industry." Dongfeng Group shares pointed out in the financial report.

Affected by the shortage of chips, the joint venture passenger car business sold approximately 1,875,100 units, down about 8.8% year-on-year. Dongfeng Group co., Ltd. pointed out in the financial report that the joint venture passenger car business is facing a huge impact of lack of cores, Dongfeng Honda's cumulative terminal sales in 2021 793272 units, and in 2020, this figure is more than 850,000 units; Dongfeng Nissan's terminal sales in 2021 1134889 vehicles, a drop of more than 10%. In the whole of 2021, the wholesale volume of peugeot and Citroë brands in China was only 100567.

Affected by the upgrading of national regulations and the decline in the demand environment of the industry, commercial vehicles sold about 523,000 units in the whole year, a year-on-year decline of 5.8%.

However, the autonomous passenger car business grew, with annual sales of 377,000 units, up 47.1% year-on-year, 40 percentage points higher than the industry growth rate.

In addition, the Group's total other revenue in 2021 was approximately RMB5,024 million, an increase of approximately RMB223 million from approximately RMB4,801 million in the same period in 2020. The increase in other income was mainly due to dividends on investment income from Stellantis and Faurecia, investment income from the disposal of Xiaokang shares, and income from debt restructuring of Dongfeng Motor (Wuhan) Co., Ltd.

According to public information, in 2014, Dongfeng Group purchased 14.1% of the equity of French PSA Group for 800 million euros (equivalent to 6.691 billion yuan), ranking it as the largest shareholder along with the French government and the Peugeot family. In January 2021, with the merger of PSA and FCA to form the Stellantis Group, the approximately 100.6 million shares of PSA held by Dongfeng Group were all converted into 175 million shares of Stellantis, with a shareholding ratio of 5.62%. The 20.7 million original PSA shares that were unsold were converted into 36.06 million Stellantis shares.

In September 2021, Dongfeng Group sold 36.06 million shares of Stellantis for a total price of 600 million euros (about 4.677 billion yuan) for 16.65 euros per share, and after the completion of the placement, Dongfeng Group still holds a 4.5% stake in Stellantis.

In 2021, Stellantis' net revenue was 152 billion euros, an increase of 14% from before the merger; after-sales operating profit increased by 18 billion euros, adjusted operating margin of 11.8%, fully profitable in all segments; net profit was as high as 13.4 billion euros, nearly twice as much as the year-on-year.

In terms of costs, sales and distribution costs in 2021 were approximately RMB5,741 million, an increase of approximately RMB698 million from approximately RMB5,043 million in the same period in 2020. The increase in sales and distribution costs was mainly due to the increase in the publicity fee for the launch of new models such as Yixuan MAX, T5 EVO, and Lantu FREE, and the increase in market development fees corresponding to the adoption of the direct operation model of the high-end Lantu brand.

Lantu Automobile was established by Dongfeng Company in 2018, Lantu integrated Dongfeng's more than 50 years of car-making technology and superior resources, positioned as "zero anxiety high-end intelligent electric brand".

At the Lantu Automobile brand press conference held in July 2020, You Zheng, member of the Standing Committee of the Party Committee and deputy general manager of Dongfeng Company, said: "Lantu Automobile Technology Co., Ltd. will adopt a new organizational mechanism, a new team and a new business model to provide users with a high-end intelligent electric experience with zero anxiety with the attitude of China's new strength in car manufacturing. Lantu Automobile will also lead the brand of Dongfeng Company upwards, as well as the development trend of China's new energy 3.0 era. ”

As an important strategic layout of Dongfeng Company, Lantu is a high-end electric brand created by Dongfeng Company with the strength of the whole group, and Lantu undertakes the dual tasks of new energy and high-end of Dongfeng Company.

Dongfeng Motor has formed an independent team for Landu, giving Landu Automobile greater autonomy in development. The new organizational mechanism of "mature car companies + new car manufacturing forces" has made Lantu Automobile begin to embrace the new model of car manufacturing in its development strategy. A series of actions to change the service concept, lay direct sales channels, and enhance user stickiness have allowed the outside world to see the efforts of Lantu Automobile.

Under the new organizational mechanism, Lantu Automobile has carried out a series of bold and open marketing and established a strategy of going to sea. However, in terms of sales, Lantu is still in the climbing stage. According to the data, since the official delivery in August 2021, a total of 6791 vehicles have been delivered in 2021.

In terms of profit, the total gross profit of Dongfeng Group in 2021 was about RMB14.190 billion, a decrease of approximately RMB1.622 billion, or a decrease of approximately 10.3%, from RMB15.812 billion in the same period of 2020, and the consolidated gross profit margin was about 12.6%.

Focus on the autonomous passenger car business

In 2022, Dongfeng Motor Group's sales target will increase by 25% year-on-year. Among them, commercial vehicle sales increased by 10%, and passenger car sales increased by 28%.

In terms of commercial vehicles, we will fully implement the brand upward through the launch of 4 new products, and at the same time vigorously promote the transformation and synergy to new car sales + powertrain + aftermarket, and further enhance the competitiveness of Dongfeng commercial vehicles. At the same time, it will accelerate the improvement of the whole process and full cycle marketing capabilities, continue to maintain the group's commercial vehicle industry position in the national six fields, reflect the brand advantage of Longqing Powertrain, and realize the demonstration operation of GX high-end heavy truck export to the European market.

In terms of passenger cars, more than 13 new products will be launched in 2022, including 5 independent brands, including key models such as Lantu Dreamer and Fengshen Haoji; 8 joint venture brands, including Dongfeng Nissan ARIYA, Dongfeng Honda e· NS1, next-generation CRV, DPCA D78 and other models.

In fact, for Dongfeng Group, the current main business is undoubtedly the independent passenger car sector, as well as the creation of high-end new energy independent brands. All along, although Dongfeng Group has many independent passenger car brands, including Fengshen, Fengxing, Scenery and past demeanor, it lacks competitiveness and the market performance is sluggish.

In order to change this situation, in 2021, Dongfeng Group began to increase investment in the field of autonomous passenger cars. According to the "14th Five-Year Plan" released by Dongfeng Group, by 2025, Dongfeng commercial vehicles, autonomous passenger cars and new energy vehicles are all planned to reach 1 million units. Among them, the scale of Dongfeng's own brand passenger cars should enter the top three in the industry. In terms of R&D investment, Dongfeng Motor Group will grow to 100 billion yuan during the "14th Five-Year Plan" period, of which the R&D investment intensity of independent brands is not less than 6%.

By 2025, the production and sales target of the new electric vehicle brand Lantu Automobile is 200,000 units; the sales target of Dongfeng Fengshen is 400,000 vehicles, and by 2024, the entire series of products of the Fengshen brand will achieve 100% electrification transformation; and the factory of M high-end electric off-road project has also recently started construction, and the new MORV electric off-road vehicle platform is also accelerating research and development, and the first model will be officially put into production in 2023, and finally reach the production capacity of 100,000 vehicles.

There is no doubt that to boost the independent passenger car business, Dongfeng will focus on the Lantu brand, M high-end electric off-road and Dongfeng Fengshen. According to reports, in June this year, Landu's second model, the Lando Dreamer MPV, will be listed, and the sedan will be put into production at the end of 2022 and put on the market in early 2023. Another new high-end electric off-road M brand will also be released in June this year.

However, for Dongfeng Group, completing a series of development goals for autonomous passenger cars will face considerable challenges and require a lot of investment.

Previously, Dongfeng Group planned to return to the A-share ChiNext board, planning to raise 21.033 billion yuan, of which 70% was used to build the Lantu brand, however, due to various reasons, in September 2021, Dongfeng Group issued an announcement that due to the decision of the China Securities Regulatory Commission to agree to register, based on the company's business decision and strategic adjustment, combined with the actual market situation, the company decided to withdraw the application documents for listing on the ChiNext board to the Shenzhen Stock Exchange, and intended to apply for the initial public offering of RMB common shares (A shares) The shares are listed on the Main Board of the Shenzhen Stock Exchange.

Dongfeng Group said that the funds raised from the offering and listing will be used for the new brand of high-end new energy passenger car projects, new generation automobile and forward-looking technology development projects and supplementary working capital after deducting the issuance fees.

"Passenger car joint ventures and autonomous segments will grow, and commercial vehicle sales may decrease by thousands." Dongfeng Group finally said.