Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
DONGFENG GROUP
HKEx Stock Code : 00489 
 
Corporate Profile
Dongfeng Motor Group is engaged in the manufacture and sale of commercial vehicles, passenger vehicles, engines and auto parts and also the production of vehicle manufacturing equipment. Dongfeng Motor Group is also engaged in the import and export of vehicles and vehicle manufacturing equipment, fi nance and insurance agency business and trading of used cars.

Business Review - For the year ended December 31, 2012

The principal products of the Dongfeng Motor Group include commercial vehicles (heavy duty trucks, medium trucks, light trucks, mini trucks and buses, and commercial vehicles engines, auto parts and vehicle manufacturing equipment of commercial vehicles) and passenger vehicles (sedans, MPVs, SUVs and passenger vehicles engines, auto parts and vehicle manufacturing equipment of passenger vehicles). In addition, the Dongfeng Motor Group is also engaged in the import/export of vehicles and equipment, finance, insurance agency and used car trading.

The Dongfeng Motor Group's commercial vehicle business, which was established in 1969, has secured a leading position in the PRC commercial vehicle industry for many years. As at the end of 2012, the Dongfeng Motor Group's commercial vehicle business is principally operated by Dongfeng Motor Co., Ltd, the joint venture between the Company and Nissan Motor Co. Ltd (through Nissan (China) Investment Co, Ltd). On 16 January 2013, the Company established a wholly-owned subsidiary, Dongfeng Commercial Vehicles Co., Ltd. According to the agreement signed on 16 January 2013, the Company and Dongfeng Commercial Vehicles Co., Ltd. will acquire businesses, including heavy and medium duty truck business, from Dongfeng Motor Co., Ltd and Dongfeng Commercial Vehicles Co., Ltd. will become a joint venture company between the Company and AB Volvo.

The Dongfeng Motor Group's passenger vehicle business is principally operated by the Company (through Dongfeng Passenger Vehicles Company) and the following Dongfeng Joint Venture Companies: Dongfeng Motor Co., Ltd, Dongfeng Peugeot Citroen Automobiles Company Ltd (the joint venture between the Company and the PSA Peugeot Citroen Group), and Dongfeng Honda Automobile Co., Ltd (the joint venture between the Company and Honda Motor Co., Ltd (partly through Honda Motor (China) Investment Co, Ltd). The passenger vehicle engines and auto parts business of the Dongfeng Motor Group is principally operated by Dongfeng Motor Co., Ltd, Dongfeng Peugeot Citroen Automobiles Company Ltd, Dongfeng Honda Engine Co., Ltd, Dongfeng Honda Auto Parts Co., Ltd and Dongfeng Honda Automobile Co., Ltd.

In recent years, the Dongfeng Motor Group has strengthened its new energy vehicle business, which is principally operated by Dongfeng Commercial Vehicles Co., Ltd., Dongfeng Electrical Motor Joint Stock Co., Ltd and Dongfeng Motor Co., Ltd.

The Dongfeng Motor Group's vehicle manufacturing equipment business is principally operated by Dongfeng Motor Co., Ltd.

The Dongfeng Motor Group's finance business is principally operated by the following companies: Dongfeng Nissan Auto Finance Co., Ltd (the joint venture company between the Company and Nissan Motor Co. Ltd), Dongfeng Motor Finance Co., Ltd (the joint venture company between the Company and Dongfeng Motor Co., Ltd, and will be wholly owned by the Company upon its acquisition of the entire equity interests held by Dongfeng Motor Co., Ltd pursuant to an agreement entered into on 26 January 2013) and Dongfeng Peugeot Citroen Auto Finance Co., Ltd (the joint venture company between French Peugeot Citroen Hotland Finance Co., Ltd, Dongfeng Peugeot Citroen Automobiles Company Ltd and the Company).

1. Commercial vehicles

As at 31 December 2012, the members of the Dongfeng Motor Group produced 41 series of commercial vehicles, including 34 series of trucks and 7 series of buses. The commercial vehicles of the Dongfeng Motor Group are mainly manufactured by Dongfeng Motor Co., Ltd. The commercial vehicles manufactured by the Dongfeng Motor Group are sold mainly through four major sales and after-sales service networks exclusively for commercial vehicles manufactured by the Dongfeng Motor Group, which form one of the most extensive commercial vehicle sales and service networks in the PRC.

Commercial vehicle engines produced by the Dongfeng Motor Group are mainly provided for internal use and external sales. Dongfeng Motor Co., Ltd and Dongfeng Automobile Co., Ltd, mainly produce Dongfeng series and Dongfeng Cummins series diesel and petrol commercial vehicle engines.

In addition to engines, the Dongfeng Motor Group also manufactures a range of auto parts for commercial vehicles, including power transmission systems (mainly comprised of gear box, clutch and transmission shaft), vehicle bodies (mainly comprised of stamping parts) and chassis (mainly comprised of axles, car frames and chassis parts), electronic components and other parts.

2. Passenger vehicles

As at 31 December 2012, the members of the Dongfeng Motor Group produced 41 series of passenger vehicles, including 28 series of sedan, 6 series of MPV and 7 series of SUV. The passenger vehicles manufactured by the Dongfeng Motor Group are sold through eight independently managed sales and the after-sales service networks throughout the PRC. Each of these networks provides sales and after-sales services for one brand of passenger vehicles and is managed by the relevant joint venture of Dongfeng or the Company.

The passenger vehicle engines manufactured by Dongfeng Motor Co., Ltd, Dongfeng Peugeot Citroen Automobile Company Ltd and Dongfeng Honda Automobile Co., Ltd are mainly for internal use, while those manufactured by Dongfeng Honda Engine Co., Ltd are mainly for external sales. In addition to engines, the Dongfeng Motor Group also produces a range of auto parts for passenger vehicles, including power transmission systems (mainly comprised of gear box, clutch and transmission shaft), vehicle bodies (mainly comprised of stamping parts), chassis (mainly comprised of axles, car frames and chassis parts), electronic components and other parts.

3. Other businesses

The Dongfeng Motor Group is also engaged in the production of vehicle manufacturing equipment through Dongfeng Motor Co., Ltd. The vehicle manufacturing equipment produced by Dongfeng Motor Co., Ltd includes machine tools, coating equipment, die and forging moulds, and measuring and cutting tools. Dongfeng Motor Co., Ltd also provides equipment maintenance services. In addition to the above businesses, the Dongfeng Motor Group is also engaged in the import/export of vehicles and equipment, finance, insurance agency and used car trading businesses.

Business Outlook - For the year ended December 31, 2012

The domestic automobile industry will maintain its growth but the growth is expected to slow down in the next few years. It is expected that the total sales volume of domestic automobiles will increase by approximately 7% in 2013. According to the current anticipation of the future market trend and the development plan of the Dongfeng Motor Group, the Dongfeng Motor Group will launch approximately 19 new passenger vehicle models, including medium-high sedans, compact sedans, small sedans, SUVs and MPVs and a new series of heavy duty trucks for commercial vehicles within the next two years.

In terms of operating quality, the Dongfeng Motor Group will strive to improve the efficiency and effectiveness of its operation and resource utilization so as to consolidate its leading position in the industry in terms of cost control, quality and profitability.

The dispute between China and Japan over the sovereignty of Diaoyu Islands in September 2012 has made a material and adverse impact on the sales of Japanese automobile brands in the domestic market. It is anticipated that the sales of Japanese-brand sedans will continue to be affected by the uncertainties of the external environment in the next few years. Nevertheless, as the impact of dispute on the market has weakened, it is expected that the growth of Dongfeng Nissan and Dongfeng Honda will recover gradually and the proprietary brands and Dongfeng Peugeot Citroen Automobiles Company Ltd will maintain their growth momentum. It is anticipated that the growth of production and sales volume of the Dongfeng Motor Group will continue to outpace the industry, which will further consolidate and enhance its market position in the automobile industry in the PRC.

Source: Dongfeng Motor (00489) Annual Results Announcement
Chairman Xu Ping Issued Capital (shares) 2,856M
Par Value RMB 1 Market Capitalisation (HKD) 31,299M
 
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