Renault Slim To Save Himself: How Can Dongfeng Be Recovered?

In April 14th, with the announcement of a 00489.HK announcement, the Sino French joint venture brand Dongfeng Renault, which has just been 7 years ago, officially announced its withdrawal from the Chinese auto market.

Dongfeng Renault's disintegration took Dongfeng Motor's 50% stake in Renault's joint venture and ended its Renault brand related business activities.

Subsequently, Renault group also issued a statement indicating a preliminary agreement with Dongfeng Group on the transfer of shares of Dongfeng Renault. In the future, Renault will concentrate its efforts in the field of electric vehicles and light commercial vehicles.

"In the fiercely competitive Chinese traditional fuel vehicle market, it is certainly not the strength of Renault. However, in light commercial vehicles, especially in the electric vehicle market, Renault does have much room for improvement. At the moment, Renault does need to concentrate strength in China. " An insider close to Dongfeng Automobile told reporters.

For Renault, this is the "self-help" of global car companies in the face of structural adjustment of the global automobile industry and the spread of the epidemic and the global automobile industry downturn.

But for Dongfeng, after taking over Dongfeng Renault, it also means taking over a series of complicated and intractable problems.

Although Dongfeng Group said in its announcement that after the reorganization, the company intends to transform and upgrade Dongfeng Renault, according to the overall strategic layout of the company, it is committed to achieving high-quality development and technological and business mode innovation.

But faced with the work of the Dongfeng Renault Wuhan factory that has just resumed work, how to resettlement more than 1000 Dongfeng Renault employees, how to recover the hundreds of Dongfeng Renault franchised stores and the after-sales service of China's 300 thousand Renault owners, whether Dongfeng or Renault did not seem to give a clear response in the announcement.

The problem of Dongfeng

"In fact, last year, shareholders of both sides of China and France were discussing the issue of" breaking up ". Dongfeng has said it will not invest any more money to Dongfeng Renault. It was originally thought that Dongfeng had quit the joint venture. In April 20th, a person close to Dongfeng Group told reporters on twenty-first Century economic report.

In fact, at the beginning of 2020, Renault CEO Del said that in the next 3 years, the structural cost of 2 billion euros would be reduced, and the proposal to close the joint venture plant would be put on the table, and the joint venture with Dongfeng Group could be reassessed. If we could control the cost, we would vigorously promote this measure.

It is understood that in 2019, Dongfeng Renault cumulative sales volume was only 18607 vehicles, down 63% compared with the same period last year, operating profit of -15.72 billion yuan.

"In view of the decline of the domestic automobile market and the operation of Dongfeng Renault, the shareholders are ready to restructure Dongfeng Renault." In April 14th, both shareholders pointed out in a notice.

Despite the anticipation, the release of the restructuring news still left Dongfeng Renault employees unprepared.

"At present, factories have already communicated with employees, and some workers are negotiating compensation." The insider told reporters.

According to the current public information, Dongfeng has given three solutions to the remaining 1000 Dongfeng Renault employees. First, in order to solve the relevant omission problems, some personnel will be retained; secondly, according to the new business development plan, some personnel will be retained; third, employees can also choose to negotiate the termination.

"Personnel diversion and placement is still a thorny problem before the east wind, but the problem of dealers is more difficult." The above-mentioned people familiar with the matter said that the retention and retention of more than 100 Dongfeng Renault franchised stores and maintenance service stations in the country are still noteworthy. Because dealers have not yet settled the detailed rules for dealing with distributors, dealers are still waiting to see.

"In April 14th, Dongfeng Renault unilaterally gave each dealer a letter to terminate the dealer agreement, and there was no contact or argument. The question of how to deal with the sales rebates, the sale rebates, how to deal with the inventory cars, how to compensate for the potential losses, and the compensation are not in the open. In April 20th, a representative of Dongfeng Renault dealer in East China said in an interview with the economic report reporters in twenty-first Century.

The dealer's letter of notification of termination of dealer agreement provided by the dealers shows that because of the two consecutive negative growth of China's automobile market and the major impact of this year's global epidemic on the economy, both of you and us both face a grim situation, which is difficult to continue operation, and the two sides should cancel the contract in time. Meanwhile, Dongfeng Renault expressed willingness to actively communicate and properly handle related creditor's rights and liabilities.

"After the announcement, the first time has informed the parties concerned, including employees, distributors, suppliers and banks, and the personnel diversion plan is still being calculated, and it will be reasonably and properly resolved." In April 20th, Dongfeng Renault told reporters.

"In the announcement, the arrangements for staff and suppliers are mentioned, but the dealer is the most urgent thing to do, not to mention the placement of distributors." In April 20th, the chairman of Dongfeng Reynolds dealers union said in an interview with reporters, "there are hundreds of thousands of millions of dollars in the Dongfeng Renault system, and how do they repay them? There are dozens of units, but how many cars will be handled in ten units and eight units? The most fatal thing is where the accessories come from and how to provide after-sales service to the old owners. Our demand is not much. We need Dongfeng Renault to give a reply as soon as possible, return the sales rebate and solve the subsequent problem of termination of the sale agreement as soon as possible. "

It is understood that at present, in the Dongfeng Renault dealer rights protection WeChat group, the number of rights protection has increased to more than 80.

"We have sent a letter to Dongfeng Renault today, asking the factory to find a person who can dock with the national distributor by the end of April, followed by a preliminary compensation plan or solution." Dongfeng Reynolds dealers Federation chairman told reporters, "the epidemic is so great, the market is not good, dealers have also been difficult, but Dongfeng Renault suddenly unilaterally stop the sale agreement, the loss to dealers is really unbearable."

At the same time, since the Renault brand has entered China, the protection of 300 thousand owners' after-sale services is also worthy of attention.

Renault will continue to Renault dealers, and use the alliance's synergy mechanism to continue to provide quality customer service to Renault owners in 300 thousand. The development of Renault brand passenger cars will be described in detail in the new medium term development plan of Renault. Renault pointed out in the announcement.

Many Renault owners also expressed concern about reporters. On the one hand, whether the future maintenance and repair will increase the difficulty and cost, on the other hand, they are worried about the future vehicle value preservation rate.

"After-sales service need not worry at all. We can still provide it in the store in the future. At present, there are still dozens of stock cars left in the store, which are now in the clearance stage. In the future, the Renault brand fuel vehicle will resume its import mode, but the specific time is still waiting to be announced. On the morning of April 20th, a Beijing Dongfeng Reynolds dealer told reporters.

But the Dongfeng Renault reorganization curtain has just opened. There is no final conclusion on how the follow-up sales system will develop. It is still uncertain whether more than 100 4S stores will continue to sell Renault brand.

Abandon Renault, protect dragon, develop independent high-end

In an industry expert familiar with Dongfeng, in Dongfeng Group's business system, besides commercial vehicles and Dongfeng Honda, Dongfeng Nissan, other businesses are dragging down group development.

According to public data, Dongfeng Group sold 468 thousand commercial vehicles in 2019, an increase of 6.3% over the same period last year, while Dongfeng Honda sold 800 thousand vehicles, an increase of 11.6% over the same period last year.

Unlike commercial vehicles and Japanese joint venture brands, Dongfeng independent passenger car sales in 2019 were 323 thousand vehicles, down 15.2% compared with the same period last year. The total sales volume of Shenlong Automobile was 113 thousand and 600, down 55% compared to the same period, and the sales volume of Dongfeng Yueda KIA was 289 thousand and 900 vehicles, a new low in recent years.

Properly handling the business of marginal brands will also help companies focus their resources on supporting the development of key projects. The industry believes that the main business of Dongfeng in the future is the H division of Shenlong and its own high-end brands.

In terms of joint venture brands, Shenlong will become the highlight of Dongfeng Group's construction in 2020.

"At the end of last year, Dongfeng decided to abandon Dongfeng Renault to protect the dragon." The industry insiders told reporters.

In fact, following the release of the "Yuan" plan to promote the Shenlong Renaissance in September last year, the shareholders have extended the joint venture deadline from 2027 to 2037, and Dongfeng and PSA also plan to cooperate in the import and technology of new brands and new products.

"H business department has just been set up. At present, there is a shortage of people. There is indeed a plan to split Dongfeng Reynolds part of R & D and design staff into H division." The above said.

In addition, Dongfeng will take part in Dongfeng Renault factory to upgrade and transform it into Dongfeng intelligent manufacturing base. The industry speculated that Dongfeng Renault plant will become the carrier of "H" brand in the future.

In fact, as early as December 24, 2019, Yu Zheng, the Standing Committee member and deputy general manager of Dongfeng Motor Group Co., Ltd., said at Dongfeng Motor 2019 annual performance communication conference 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 "H".

"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." You Zheng said.

According to the plan, the brand belongs to the Dongfeng Motor Group Co which is listed in Dongfeng in Hongkong, but it does not belong to the existing independent brand passenger car company of Dongfeng company, but is an independent high-end brand as a self marketing channel.

Before the outbreak, the new brand was originally planned to be released at the Beijing motor show in April this year, and the first product will be launched at the 2021 Shanghai auto show.

However, for Dongfeng Group, before deciding on the future development path, it is imperative to solve the relationship between the workers and workers after the Dongfeng Renault as soon as possible, and the relationship between the creditor and the debt among distributors, suppliers and banks.

?