It is difficult to boost sales in a big sale, Nissan is no longer a sales weapon, and Dongfeng is difficult to pass through the trough of transformation
Tencent News "High Beam" Author Xie Wan
With the sharp decline in sales of joint ventures and the upward pressure on its independence, Dongfeng Motor is struggling to pass through the trough of transformation.
The crisis exposure began in March this year with a large-scale "price war", when Dongfeng's seven brands, including Dongfeng Fengshen, Lantu, Dongfeng Nissan, and Dongfeng Honda, and nearly 60 fuel and new energy models released the strongest car purchase discount in history, with a drop of up to 90,000 yuan.
In the first half of 2023, after a brief increase in the sales of some brands of Dongfeng Group, the sales of some brands of Dongfeng Group soon fell into a downward predicament. In the past three years, Dongfeng Group's total sales have shown a downward trend year by year, with 2.87 million units, 2.78 million units and 2.46 million units from 2020 to 2022, respectively, and the cumulative sales volume from January to October this year continued to decline by about 19.2% year-on-year to 1.6969 million units, which is less than 60% away from the annual sales target (3 million units).
The sluggish growth of sales has driven Dongfeng's profitability to decline year by year. In 2020, 2021 and 2022, the gross profit margin of Dongfeng Group shares will be 14.5%, 12.56% and 9.5% respectively, and the 2023 interim results show that the comprehensive gross profit margin of Dongfeng Group shares in the first half of this year was 10.92%, and the profit attributable to equity holders of the parent company was about 1.27 billion yuan, a year-on-year decrease of 76.9%, a new low in ten years. UBS issued a report saying that due to Dongfeng Group's poor performance in the first half of the year and the deterioration of joint venture business, it lowered its earnings per share forecast for 2023-2025 by 59% to 69%.
In the face of plummeting sales and performance, the then chairman Zhu Yanfeng tried to reverse the situation through transformation plans such as "Oriental Wind Rising" and "Leap Action" of scientific and technological innovation, but at present, it seems that Dongfeng Group, which is in internal and external difficulties, wants to break through, and it seems that there is still a long way to go.
The three major joint venture weapons began to "drag their feet"
Dongfeng Group shares have not released the third quarter results on the Hong Kong Stock Exchange, but from the production and sales data of the first ten months, it is difficult to say that the third quarter is outstanding. According to the announcement of the Hong Kong Stock Exchange, in the first 10 months of 2023, among all businesses, Dongfeng Passenger Vehicle segment has the highest decline, and none of the brands in the joint venture sector have shown signs of year-on-year growth.
Specifically, Dongfeng Nissan, Dongfeng Honda and Dongfeng Citroen, the core joint venture segments of Dongfeng Group, completed sales of 582,600, 476,300 and 69,600 units respectively in the first 10 months, down 27.75%, 15.49% and 33.74% year-on-year respectively.
In the independent passenger car segment, Dongfeng Passenger Vehicle Company and Dongfeng Liuzhou Automobile Passenger Vehicle completed sales of 94,400 units and 69,500 units respectively in the first 10 months, a year-on-year decrease of 40.7% and 32.48%, and the VOYAH brand became the fastest growing business among all segments, with cumulative sales of 33,000 units, an increase of 105.66%.
For more than 20 years, the above-mentioned joint ventures have been an important source of profit for Dongfeng Group, and after the stall of the new energy market, these high-quality assets have gradually become the "laggard" business of the entire group.
As the longest-established joint venture company within Dongfeng Group, DPCA's sales fell from 700,000 to 50,000 units from 2015 to 2020, with a cumulative loss of more than 6.4 billion yuan. With the subsequent launch of new products such as Dongfeng Citroen Versailles C5X, Dongfeng Citroen Tianyi BEYOND and Dongfeng Peugeot New 408, the sales of Dongfeng Citroen Automobile rebounded in 2021, and the cumulative delivery volume in 2022 reached 127,000 units.
By 2023, DPCA, which is over 30 years old, will be in trouble again, with sales halved year-on-year in the first half of the year, and both shareholders will have to turn to lightweight operations. In mid-October, Dongfeng Group Co., Ltd. signed an asset transfer agreement with Dongfeng Automobile to purchase Dongfeng Automobile's factories in Wuhan and Xiangyang for 1.714 billion yuan, and Dongfeng Automobile switched to leasing the asset. DPCA, which once had four production bases, currently has only one plant in Chengdu, Sichuan Province with an annual output of 360,000 units.
The two major Japanese brands, Dongfeng Nissan and Dongfeng Honda, are the pillars of Dongfeng Group's sales.
In 2023, Dongfeng Nissan and Dongfeng Honda will celebrate their 20th anniversary at the same time, but in the past three years, due to the slow transformation, the market share of the two companies has gradually been seized by rivals. During the period from 2020 to 2022, Dongfeng Honda's sales fell from 850,000 to 660,000 units, and Dongfeng Nissan fell from 1.133 million to 902,000 units.
The interim results show that in the first half of this year, the profit of Dongfeng Group's joint venture was 1.403 billion yuan, a decrease of 3.822 billion yuan from 5.225 billion yuan last year, a year-on-year decline of more than 73%. Among them, the profit contribution of Dongfeng Limited decreased by about 1.76 billion yuan over the same period, and the profit contribution of Dongfeng Honda decreased by 1.514 billion yuan over the same period.
Affected by the decline in sales of self-owned brand passenger cars, in the first half of this year, Dongfeng Group's passenger car sales revenue fell by 19.1% compared with the same period last year, from 19.919 billion yuan to about 16.110 billion yuan. Dongfeng Group Co., Ltd. said that the decrease in passenger car business revenue mainly came from Dongfeng Passenger Vehicle Company and Dongfeng Liuzhou Automobile Passenger Vehicle Business.
Dongfeng Group said that since 2023, China's auto market is still in the recovery stage, and the operation is still under great pressure, with the rapid development of overseas export markets and new energy vehicle markets, and the continuous and steady growth of independent brands, but the sales of joint venture non-luxury brands have continued to decline, and the commercial vehicle market has gradually recovered but is not as expected.
The new commander sets the tone: independent forward, joint venture backward
At the moment of rapid changes in the market structure, it is not Dongfeng that is "trapped" by the joint venture, but FAW, SAIC, GAC, Changan, etc., which only laid out independent passenger cars earlier, avoiding the risk of bottoming out in the joint venture's independent sales.
In March this year, Zhu Yanfeng, who had been in charge of Dongfeng for nearly 8 years, retired, and the task of reviving Dongfeng fell to Yang Qing, the new coach who officially took office at the end of October. From 2005 to 2020, he successively served as general manager of Dongfeng Axle Co., Ltd. and Dongfeng Commercial Vehicle Co., Ltd., and was promoted to director, general manager and deputy secretary of the Party Committee of Dongfeng Company in February 2021, directly in charge of Dongfeng Passenger Vehicle Company. At that time, Dongfeng Fengshen's sales declined for four consecutive years, and only 70,000 vehicles were sold in 2020, and under Yang Qing's leadership, the Dongfeng Fengshen brand continued to increase by more than 50% year-on-year from 2021 to 2022, reaching sales targets of more than 120,000 and 190,000 respectively.
From the results of the results, although the Dongfeng reform of the Zhu Yanfeng era did not meet expectations, Dongfeng sales fell by more than 42% from 2016 to 2022, from 4.27 million at the peak to 2.46 million, but it is undeniable that the transformation plan initiated by him has laid the foundation for Dongfeng's independent new energy sector.
In 2018, Dongfeng launched the VOYAH brand, and four years later, VOYAH is gradually on the right track, in 2021, Dongfeng released the "Oriental Wind Rises" plan, and in 2022, Zhu Yanfeng proposed that Dongfeng build a luxury, high-end, mainstream, entry-level brand development pattern, and the Mengshi brand was officially born.
Since this year, Dongfeng has started a second venture, while comprehensively slimming down, it has avoided over-reliance on joint ventures in product planning and performance, and gradually adjusted its strategy to independent "one step forward" and joint ventures "one step back".
Entering 2023, Dongfeng's independent product system began to reduce costs and increase efficiency, readjust the brand structure, and try to change the management style of central enterprises. In April this year, Dongfeng put forward the "three-year action of Dongfeng transformation and upgrading", and in August, Dongfeng adjusted the management system of the new energy business of independent passenger cars, established Dongfeng Passenger Vehicle Sales Co., Ltd. and Dongfeng Passenger Vehicle Manufacturing Headquarters, and integrated management of the marketing and manufacturing of Dongfeng Fengshen, Dongfeng eπ and Dongfeng Nano under the "Dongfeng" brand.
So far, Dongfeng's own brand has a clearer layout in major market segments, the three major brands of Dongfeng Passenger Vehicle are oriented to the mainstream market, VOYAH focuses on the high-end new energy market, and the Mengshi brand mainly serves as the brand upward responsibility.
(Dongfeng's own passenger car brand architecture)
In order to create a popular model, Yang Qing, who was still a director, general manager and deputy secretary of the party committee, launched a new round of management mechanism reform, and since September, Dongfeng Company has promoted the transformation of PM (model project director) system management, and the new model project PM signed the "Target Responsibility Letter", and PM signed the "Model Project VAM Agreement" with the deputy director of the project, representatives of the operation and support units, and representatives of the functional departments of the group.
At the level of product research and development, Dongfeng began to try to concentrate resources to improve efficiency, and established the R&D General Institute in November to build a "1+N" R&D system, "1" represents the R&D General Institute, and "N" represents the R&D departments of each business unit, and undertakes the corresponding tasks under the unified management of the R&D General Institute. It is reported that the modeling center of the R&D General Institute has been built in Wuhan with a total investment of 520 million yuan and is expected to be put into use in 2025.
In the joint venture business segment, Dongfeng has started a more decisive slimming and restructuring, several major joint ventures have gradually turned to the "in China, to the world" strategy, and Chinese shareholders have gradually grasped the initiative of product introduction.
Taking DPCA as an example, while both shareholders continue to reduce their burdens, it is clear that it will not launch new fuel vehicle models from 2024. In the next five years, DPCA will intensively launch 8 new energy models and continue to iterate on the existing 6 models.
According to DPCA insiders, DPCA's next new energy models may be empowered by Dongfeng's core technology, which can not only quickly introduce products, but also ensure that new products meet market expectations to the greatest extent. However, Stellantis Group, the foreign shareholder of DPCA, also began to look for another partner in New Energy China, and finally announced at the end of October that it would invest about 1.5 billion euros in Leapmotor.
Dongfeng Honda's reform is clearer: in September, Dongfeng Honda released a new pure electric brand, Lingxi, which adopts a new pure electric platform, and has significant differences from Dongfeng Honda's existing e:NS pure electric brand in terms of product positioning, target users, and market pricing. The birth of Lingxi as an independent new energy brand means that Dongfeng Honda has opened a new joint venture model, and the products have been imported from foreign parties to defined and developed by joint venture companies.
As early as 2016, Dongfeng Honda began to introduce strong electric intelligent hybrid technology to the Chinese market, and successively launched CR-V e:HEV, CR-V e:PHEV, 11th-generation Civic e:HEV and other models, in 2018, Dongfeng Honda officially released the "Seeing the future" new energy brand strategy, and in October 2021, it released a new pure electric vehicle brand "e:NS", and said that it will fully realize the transformation of electrification. However, the market response of the e:NS brand was not as good as expected, and the cumulative sales from January to July this year were less than 7,000 units.
As the largest joint venture in the past, Dongfeng Co., Ltd. took advantage of the 20 weeks to release a new strategy "QiDNA+", announcing that by the end of 2026, Dongfeng Co., Ltd. will launch 10 new locally developed new energy vehicles into the Chinese market, including four Nissan models, as well as Venucia and Dongfeng brands, and the first self-developed Nissan brand new energy vehicles will be launched on the market in the second half of 2024.
Chen Hao, executive vice president of Dongfeng Motor Co., Ltd., said that starting from "DNA +", Dongfeng Co., Ltd. will integrate all business units, attack as a whole, and open up the territory of global competition with Chinese assets, Chinese speed and Chinese standards. In the vehicle market, the joint venture will take the initiative to carry out export business, starting in 2025, and the first step is to set an export sales target of 100,000 units, including four new energy vehicles under the Nissan brand, and will continue to increase the number of exports according to the actual situation.
In order to form a synergy between the two business segments, Dongfeng has made clever adjustments in personnel appointments. Chen Hao, member of the Standing Committee of the Party Committee and deputy general manager of Dongfeng Company, holds important positions in Dongfeng Co., Ltd. and Dongfeng Passenger Vehicle at the same time, and concurrently serves as Secretary of the Party Committee and General Manager of Dongfeng Passenger Vehicle Sales Co., Ltd. in the independent sector, and is fully responsible for the marketing and sales of the three major brands including Dongfeng Fengshen, Dongfeng eπ and Dongfeng Nano.
According to the plan, by 2025, the sales volume of Dongfeng's own passenger cars and joint venture brands will reach 2 million units each, with a ratio of 1:1, of which new energy vehicles will account for 70% of the sales of its own brand passenger cars.
Independent transformation will still meet the "big test"
Strategic direction, organizational structure and personnel adjustment are only the first step in Dongfeng's restart, and the real test for an auto company is from the moment the product goes to market. In addition to the VOYAH brand products, Dongfeng Passenger Vehicle's three brands responsible for the mainstream market segment not only have to face new changes in internal adjustments, among which Dongfeng eπ and Dongfeng Nano have to face external competitive pressure almost from scratch.
In the 200,000-level market with a huge volume of new energy vehicles, Dongfeng just released the Dongfeng eπ brand in November, and plans to launch more than 10 models within three years to compete with competitors on the two tracks of pure electric and extended range. Before the release of Dongfeng eπ, Chen Hao issued a soul torture question: 200,000 yuan to buy a fuel car or a tram?
Dongfeng is more like asking himself.
In Dongfeng's view, the next three years 200,000 market segments are still dominated by oil vehicles, if the new energy wants to quickly occupy the market advantage, where is the core advantage of beating fuel vehicles?15-200,000 is the most competitive market segment at present, Dongfeng eπ's first product eπ007 is positioned as a Zhiya electric coupe, facing the joint venture camp such as Camry, Tian Lai and Accord and other fuel veterans, more importantly, it wants to snatch Tesla Model 3, BYD Han, AION S and other new energy explosive models market share.
In the view of Yu Fei, general manager of Dongfeng Yipai Marketing Division, Dongfeng eπ's confidence comes more from the strength of technology, eπ007 is equipped with Dongfeng quantum architecture and Mach E power, and has leapfrog performance in intelligence.
The answer given by Chen Hao is that in the cruel competitive environment, the volume and profit must be wanted, but the focus is different at different stages, the brand from the growth period to consider the building of brand power and then to pull sales, if the brand is in the mature period, the volume and profit should be taken into account, if the brand is going downhill, it must be the priority of quantity.
Different from Dongfeng eπ, Dongfeng Nano focuses on pure electric national cars, and it seems that Nano mainly lays out a small car market of about 100,000 units, competing with BYD Seagull, BYD Dolphin, Wuling Binguo and other models with monthly sales of more than 20,000 units. However, Chen Meng, general manager of Dongfeng Nano, said that the mainstream wheelbase of the "national pure electric professional brand" is 2660mm, which is at least a B-class car, not a A-class and A0-class small car.
In fact, Nano is not exactly a new brand. Founded in 2020, Dongchuang Zilian changed its name to Dongfeng Nano in February this year and began to operate independently. The original Nano model was originally built on the Renault-Nissan-Mitsubishi Alliance CMF-A platform, but now it is built on the Quantum Architecture No. 3 platform, which brings more imagination to the new Nano model.
During the Guangzhou Auto Show, the first car Nano 01 officially opened pre-sale, with a price range of 79,800-109,800 yuan. In the eyes of industry insiders, the A00 and A0 level markets are beginning to show a concentration of heads, and if the new nano does not have a clearer product definition and competitive strategy, it will be difficult to get a higher share from its opponents.
Dongfeng predicts that the market size of B-class and below new energy vehicles will exceed 2.7 million in 2025. After 2024, Dongfeng Nano will launch one or two models every year, with the goal of selling more than 400,000 units by 2025. In Chen Meng's view, to sell the products of the Dongfeng Nano brand well, the channel sinking and layout are very important.
In terms of technical layout, Dongfeng also has a clearer distinction. Dongfeng Fengshen specializes in PHEV plug-in hybrid models on the DSMA platform, Dongfeng eπ will do pure electric and extended range markets, and Dongfeng Nano will build pure electric national cars based on the quantum architecture No. 3 platform.
The transformation pressure of Dongfeng's joint venture sector is still arduous, and Venucia, a joint venture independent brand established for 13 years, will now re-assume the dual pressure of volume + transformation. In 2010, when Venucia was first established, it hoped to build a new brand with the help of Nissan technology, but after many years of hard work, it still failed to find a foothold in the brand, and returned to the Dongfeng Nissan system in 2020 after three years of independence.
During the Guangzhou Auto Show, Venucia entered the new energy exhibition hall for the first time, landing the new energy product matrix with three technical paths of plug-in hybrid, pure electric and hydrogen energy, bringing three blockbuster models of Venucia big V DD-i plug-in hybrid, Venucia VX6 and Venucia big V hydrogen. At the product level, Venucia will launch no less than 6 new models in the next three years, covering a wide range of models such as SUVs, sedans, small cars, and MPVs.
Chen Hao once said that Venucia does not have too many negative equity, and the results under the new positioning can even be fed back to the two shareholders of Nissan and Dongfeng Motor, promoting the faster process of Nissan Global and Dongfeng in electrification.
According to reports, in the next three years, Dongfeng will invest 50 billion yuan in the field of independent new energy, iteratively launch 18 independent passenger car new energy models, and launch 22 commercial vehicle basic models. In 2024, Dongfeng will achieve 100% electrification of the new models of the main brand of independent passenger cars, and by 2025, the annual sales of new energy vehicles will exceed 1 million, of which the three major product series of the "Dongfeng" brand will exceed 700,000 new energy vehicles.
The interim results show that Dongfeng Group continued to accelerate the strategic transformation of new energy, and continued to increase investment in high-end new energy brand building, platforms, commodities, key assemblies and core technology resources, with R&D investment of 3.462 billion yuan in the current period, an increase of 388 million yuan or 12.62% over 3.074 billion yuan in the same period. Among them, the investment in new energy research and development was 1.560 billion yuan, an increase of 515 million yuan, or 49.3%, compared with 1.045 billion yuan in the same period.
UBS issued a report saying that Dongfeng's Dongfeng Nissan and Dongfeng Honda, two major profit contributors, continue to face challenges, with declining market share and profits. Dongfeng is investing in its own brand of electric vehicles, but in the fierce market competition, these electric vehicles lack the visibility to generate profits.