Dongfeng Detailed Reduction Of PSA Equity: New Strategy Surfaced, Shenlong Entered A New Era Of Joint Venture

From the investment point of view, Dongfeng shares PSA, the stock price has been more than three times. This part of the proceeds can help the development of Dongfeng's future career. December 24th, Dongfeng Motor Group Co., Ltd. (hereinafter referred to as "Dongfeng Motor"), the Standing Committee of the Party committee and deputy general manager, Yu Zheng, for the first time disclosed the details of Dongfeng's reduction of PSA stake in Dongfeng Motor's 2019 annual performance communication conference.

A week ago, with the signing of the merger agreement between Peugeot Citroen (PSA) and Fiat Chrysler Group (FCA), the shareholding reduction action of Dongfeng Motor, one of the largest shareholders of PSA, also aroused concern.

In the industry's view, behind the move is the positive turn of the global car companies in the face of the structural adjustment of the global automotive industry and the challenge of "new four modernizations".

Of course, what will be the status of Dongfeng Automobile in the new group after its PSA reduction and how to participate in the future global market competition? Whether the failure of Changan PSA will affect the development of PSA and Dongfeng joint venture dragon, how to revive Shenlong's business in the future, whether Opel brand has the possibility of returning to the Chinese market and so on will also cause many conjectures in the industry.

New strategic layout of Dongfeng

In fact, from the perspective of Dongfeng, based on the overall strategic arrangement and investment income of Dongfeng, reducing PSA equity and facilitated the merger of PSA and FCA will be beneficial to the future layout of Dongfeng Automobile.

"The scale effect of the entire auto industry is actually very obvious. For the automotive industry, it is very necessary to do large-scale business. In the future, no matter in the sales area or vehicle development, it is a transaction with great synergy and development potential, so Dongfeng will definitely hold a supportive attitude towards such a transaction. In December 24th, a person close to the Dongfeng reduction transaction said in an interview with the twenty-first Century economic report reporter that the merger reached the background of the global transformation to the new four modernizations, the new energy and intelligent investment were very large, and the future synergy and complementary prospects could be expected.

"Reduce the money to take back the development of independence, the east wind." Regarding the use of funds for the reduction of shares in Dongfeng Automobile, you Zheng gave a clear answer.

From the performance of the first 11 months of Dongfeng and the future strategic planning, Dongfeng will meet the challenges of the future with a brand new strategic layout.

Public data showed that in the 1-11 month of this year, Dongfeng accumulatively sold 3 million 248 thousand vehicles, down 5.3% compared with the same period last year, operating income was 522 billion 510 million yuan, down 3.7% compared with the same period last year, and the total profit was 39 billion, a slight increase of 0.4% over the same period last year.

Among them, the sales volume of self brand passenger cars is 480 thousand, the sales volume of the joint venture brand passenger cars is 2 million 203 thousand, while the Dongfeng commercial vehicle sales volume is 565 thousand, and the market share has increased to 14.6%, returning to the industry first. Joint-venture enterprises outperformed the big market, Dongfeng Nissan, Dongfeng Honda and Dongfeng Infiniti increased their market potential further. In terms of autonomy, although Dongfeng's autonomous passenger vehicle sales fell by 17.8% over the same period last year, it has been growing for two consecutive months in four months in the second half of this year, with a cumulative increase of 6.1% and 55 thousand new energy sales, an increase of 12% over the same period last year.

On the development of China's automobile market in 2020, Dongfeng side gave the anticipation of "lower than expected, market bottoming and adapting to the new normal". Dongfeng believes that China's auto market will continue to grow negatively in 2020, and it will ease in 2021.

"The market share of the independent brand will decline, but the knockout will be open, but there will still be opportunities. Independent development will also become the start of the competition with the joint venture brand." Yu Zheng said that in the face of the development of independent brand ceilings and the development trend of new energy and the upgrading of consumption in the domestic automobile market, Dongfeng will enhance the brand image and create a brand new high-end passenger car brand "H".

According to the plan, the brand belongs to Hong Kong listed companies Dongfeng Motor Group Co of Dongfeng company, but it does not belong to the existing independent brand passenger car company of Dongfeng company, but it exists as an independent high-end brand and builds its own sales channels.

"In the future, our H department will build high-end new energy passenger vehicle products, lead Dongfeng brand up, explore innovative management mechanism mode, and form the best operation practice of independent business." Gao Guolin, general manager of Dongfeng Motor Group Co., Ltd., general manager, said the new brand will be officially released next year during the Beijing auto show, and the first product will be launched at the 2021 Shanghai auto show.

In the new energy field, Dongfeng new energy 2 park has been completed at the first stage, and fuel cell industrialization is also in progress. In the future, Dongfeng plans to achieve centralized and autonomous control of core resources, promote the landing of key assembly and S (electric vehicle platform), and continuously build 3 series and 10 electric drive products, so as to form a serialized product spectrum satisfying the electric cars of the whole group.

In addition, Dongfeng will also push forward the iterative upgrading of Dongfeng intelligent network platform and Win dlink intelligent cockpit according to the plan, and at the same time, promote automatic driving technology. At present, the Dongfeng Technology Center, which is equipped with L2 class intelligent assistant driving function, has been listed on mass production. In 2020, it will also launch a version of L3 automatic driving technology. In addition, Dongfeng Sharing-Van equipped with L4 automatic driving technology and Dongfeng RoboTaxi also appeared one after another.

Shenlong usher in new joint venture Era

In December 17th, on the eve of the signing of the merger agreement between PSA and FCA, Dongfeng and PSA signed a new strategic alliance cooperation agreement, confirming the cooperation with the new company in the future.

"In addition to sharing the benefits of the new company and the synergistic effect after the merger, Dongfeng will also receive more support from PSA for domestic joint ventures through the reduction and signing of a series of strategic agreements." The above said.

However, the failure of the joint venture in the Chinese market is an indisputable fact. Therefore, it is imperative for Dongfeng to lay out the layout and the future of PSA.

According to the content of the agreement, the joint venture period of Shenlong Automobile will be extended from 2027 to 2037. Dongfeng and PSA will also cooperate in the new brand and new product introduction, technology and so on.

If compared with the strategic alliance agreement signed by both sides in 2014 when Dongfeng shares PSA, the renewal is equivalent to strengthening and extending the last alliance treaty. Dongfeng hopes to consolidate the cooperation alliance between Dongfeng and PSA before the merger of PSA and FCA, and to lock in the future opportunities for cooperation.

"The contents of the alliance agreement will be reflected in the merger agreement between PSA and FCA. One of the prerequisites for the merger is to acknowledge all the cooperation agreements reached before PSA." Dongfeng side said that the landing of these cooperative measures is crucial for the revival of Shenlong Automobile.

But the core question is, next, how will PSA and the fourth major automobile groups in the future cooperate with Dongfeng?

"In this alliance, our core demand is that the development of China in the future will be discussed, taken into effect and decided through the strategic alliance regardless of whether PSA is good or the new company is merged. The development of China in the future will reflect the principle of giving priority to Dongfeng." Dongfeng insiders told reporters that the mechanism of the alliance has been the dual presidents of both sides. This mechanism will continue. There will be three strategic alliance committees to discuss, adopt and implement various strategies every year.

"In fact, we are more concerned about the adaptability of legal system products in China. At this point, this Shenlong has made a new breakthrough arrangement. Dongfeng insiders told the twenty-first Century business news reporter that according to the new agreement, PSA will open the dragon and Dongfeng company on the product platform.

"The joint venture company will have the authority to open the technology platform and technical data with the support of the parent company, and make use of China's resources to meet the needs of the Chinese users and meet the cost competitiveness of the Chinese market." Dongfeng insiders pointed out that, however, the premise of platform opening and localization development is that both sides of the joint venture have to invest in R & D, and the new products should have obvious market benefits.

At the same time, the two sides are still making more open arrangements and designs in terms of China's resources. In the future, the joint venture will give play to the advantages of Shenlong in terms of production capacity, and export to China in the world. The export of future models will involve more overseas markets including Europe and North America.

"The dominant market of PSA is in Europe and the Middle East, and the dominant market of FCA is in North America and South America. This is a great good for the future certification of Dongfeng Automobile and PSA joint venture company. With regard to the impact of PSA and FCA merger on China's business, you Zheng believes that the new group will undoubtedly introduce more and better products that are suitable for the Chinese market in the introduction of new brands and new products.

The most important thing is that Dongfeng Motor has a "priority" for the development of the group in China, including the layout of new brands and products, as the shareholder of the world's fourth largest auto group.

The so-called "priority" can be understood as PSA's all brands enter China, and Dongfeng has the right to choose. So far, the only brand that PSA has not entered the Chinese market is Opel. Dongfeng related sources told the twenty-first Century economic news reporter.

As for the issue of whether the Opel brand is very much concerned about returning to China, Dongfeng insiders say that it will not be ruled out in the future, but when the Opel brand enters the Chinese market, it must be judged according to the market situation.

With this opportunity, whether Opel entered the Chinese market has become a suspense. It is also considered by the industry to be the return of Dongfeng's holdings of PSA shares.

"If we are strong enough to join hands or warm up together, if the merger is successful, it will be a typical representative case for the industry." Dongfeng insiders finally said that the merger of PSA and FCA would bring a very good opportunity to the development of these two enterprises.