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Joint venture brand is weak! Dongfeng Group has lost money for the first time since its listing.

2024-05-27 Update From: AutoBeta NAV: AutoBeta > News >


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On the evening of March 28, Dongfeng Automobile Group Co., Ltd. (hereinafter referred to as "Dongfeng Group") released its 2023 performance report. According to the financial report, the group's annual revenue was 99.315 billion yuan, an increase of 7.2% over the same period last year, but the profit changed from positive to negative, and the loss attributable to shareholders was 3.996 billion yuan, a sharp reduction of 14.261 billion yuan compared with the profit of 10.265 billion yuan in the same period.

It is understood that Dongfeng Group was listed on the Hong Kong Stock Exchange in 2006, which is also the first loss since its listing. The weak overall performance of the joint venture brand is the main reason for Dongfeng Group's losses. It is understood that Dongfeng Motor's share of the joint venture's profits and losses during the reporting period was 513 million yuan, a decrease of 11.371 billion yuan compared with the same period, of which Dongfeng Limited decreased by 4.188 billion yuan and Dongfeng Honda decreased by 4.694 billion yuan.

Sales of Dongfeng Group have declined for five years in a row. According to the financial report, Dongfeng Group sold 2.0882 million vehicles in 2023, down 15.27% from the same period last year, of which 348000 new energy vehicles were sold, up 0.5% from the same period last year. It is understood that from 2018 to 2022, Dongfeng Group sold 3.0522 million vehicles, 2.932 million vehicles, 2.8683 million vehicles, 2.7751 million vehicles and 2.4645 million vehicles respectively, to 2.088 million vehicles in 2023, a decline for five consecutive years.

In terms of specific brands, among the joint venture brands, Dongfeng's daily production and sales volume in 2023 was 723100, down 21.53% from the same period last year; Dongfeng Honda was 604800, down 8.54% from the same period last year; and DPCA was 80300, down 35.81% from the same period last year. It was also difficult for independent brands. Dongfeng Liuqi sold 120800 vehicles, down 23.04 percent from the same period last year, while Dongfeng passenger cars were 117000, down 38.63 percent from the same period last year. Dongfeng Lantu alone increased by 159.08 percent, with sales of 50300 vehicles.

According to Automotive Industry concern, Dongfeng Nissan and Dongfeng Honda accounted for 63.59% of the group's total sales (1.3279 million vehicles), while Dongfeng Liuqi and Dongfeng passenger cars accounted for only 11.38%. In other words, the joint venture brand is still the main source of sales of Dongfeng Automobile, and the performance of the joint venture brand will directly affect the performance of Dongfeng Automobile. The future growth of Dongfeng Automobile is mainly driven by new energy vehicles. Dongfeng Group sold 348000 new energy vehicles in 2023. Although the new energy brand Lantu achieved its annual sales target, it sold 50600 vehicles for the whole year, averaging less than 5000 per month.

The decline of joint venture brands and the head-on catch-up of independent brands have become the truest portrayal of China's automobile market, and it also reveals the awkward position of joint venture brands in the domestic market. Previously, joint venture brands have dominated the Chinese car market for more than 20 years, and Chinese car brands have no choice, but now independent brands have gradually become the target for global car companies to catch up.

For Dongfeng Motor, to achieve the sales target must rely on its own brand, and need to rely on the new energy market. On August 16, Dongfeng Motor launched the new energy strategy of Dongfeng passenger vehicles and made a major adjustment to the management system of the new energy cause of independent passenger vehicles. After the adjustment, Dongfeng Motor will integrate the management of Dongfeng Fengshen, Dongfeng e π and Dongfeng Nano. Among them, Dongfeng Fengshen will speed up the transformation from fuel vehicles to energy-efficient vehicles, Dongfeng e π is positioned as an electric brand oriented to the mainstream market, and Dongfeng Nano is a pure electric brand oriented to small market segments. Plan to distinguish between the fierce brand for the luxury electric off-road market, the Lantu brand for the high-end new energy market, and the Dongfeng brand for the mainstream market.

It is worth mentioning that the post of general manager of Dongfeng Automobile Group was finally filled a few days ago. Zhou Zhiping, former deputy general manager of FAW Group, was appointed director, general manager, and deputy secretary of the party committee of Dongfeng Automobile Group Co., Ltd. Yang Qingsheng, the former general manager, was appointed chairman and party committee secretary of Dongfeng Company.

In the face of the escalation of competition in the automobile market this year, Dongfeng must speed up the pace of transformation. It is understood that the overall sales target of Dongfeng Group in 2024 is 2.7 million vehicles, an increase of 29% compared with the 2023 sales target. A total of 420000 vehicles were sold in the first two months of this year, an increase of 41.5% over the same period last year.

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