Dongfeng Co., Ltd. gets rid of commercial vehicles, what is the next step?

On May 25, Dongfeng Motor Co., Ltd. (hereinafter referred to as Dongfeng Co., Ltd.) issued an announcement stating that Dongfeng Motor Co., Ltd. (hereinafter referred to as Dongfeng Co., Ltd.), as the controlling shareholder, is discussing with Dongfeng Motor Group to transfer the equity it holds.

At present, Dongfeng Co., Ltd. holds 60.1% of Dongfeng shares.It is understood that after the completion of the equity transfer, Dongfeng shares will be completely separated from the former, and will be directly controlled by Dongfeng Motor Group.

Looking back five years ago, Dongfeng shares transferred its 51% stake in Zhengzh ou Nissan to Dongfeng Co., Ltd. at a price of 787.5 million yuan. How similar is this scene today.

It is widely believed that the equity transfer is part of Dongfeng Group's business integration, aiming to strengthen the group's leading position in the commercial vehicle market, and at this time it is also at the final stage of the three-year reform of state-owned enterprises.

But in fact, this transaction is not unrelated to the reforms being promoted by Nissan Motor and Dongfeng Co., Ltd.In other words, after this equity transfer, Nissan is also expected to benefit indirectly.

Removing complexity from simplicity, focusing on the passenger car market in China

In December 2020, Dongfeng Co., Ltd. officially released the "V Plan" and "C Plan", and immediately began the integration work of Dongfeng Nissan Passenger Vehicle Company and Dongfeng Venucia Motor Company.After four years of independence, the Venucia brand returned to Dongfeng Nissan.

In 2021, the cumulative retail sales of Venucia brand terminals will reach 87,816 units, a year-on-year increase of 11.6%, fulfilling the previously set annual sales target and ending the three-straight decline since 2018.

Of course, there are reasons for the market downturn in 2020 due to the impact of the epidemic, but it also has a certain relationship with Dongfeng Nissan's strong system capabilities. Compared with before, Venucia has maintained a high degree of consistency and synergy with Dongfeng Nissan in various aspects such as business policies, online and offline, advertising and public relations, and regional marketing after the return, and the marketing level has formed a magnifying effect.

This can be seen in the Venucia V. The car was released on August 20 last year, and was officially launched on September 27, with only one month and a week in between. The promotion effort is the Venucia brand. Unprecedented since its inception.

On January 5, 2022, Dongfeng Co., Ltd. officially incorporated Dongfeng Infiniti into the management system of Dongfeng Nissan as an independent business headquarters.Dongfeng Infiniti has also been "downgraded" from an independently operated luxury brand to a brand under Dongfeng Nissan alongside Nissan and Venucia.

This step is not as easy as imagined, and it is even more difficult than integrating the Venucia brand.After all, the latter, as a joint venture independent brand, belonged to the Dongfeng Nissan system at the beginning of its establishment.

But Infiniti, which has a brand history of more than 30 years, has alwaystargeted Lexus, Jaguar Land Rover, Cadillac, and even BBA in theluxury car market.Although its performance in China has been much lower than expected for many years, it is not easy to let it let go of its pride.

Back in May 2020, Nissan released the "Nissan Next" corporate transformation plan, the core of which is the contraction of the global market, focusing on the Chinese, North American and Japanese markets.At the time of the transformation and upgrading of the entire industry, Nissan stopped expanding outwards and started self-rescue through contraction, hoping to achieve sustainable profitability.

According to Infiniti COO Ashwani Gupta, in this transformation plan, Infiniti is positioned as "Nissan plus".Through this positioning, combined with Dongfeng's limited integration measures, we can understand Nissan's transformation strategy, which is to withdraw the fist first, and then wait for the opportunity to fight.

In fiscal 2021, although Nissan's global sales declined, its revenue and profit achieved double growth, and it was profitable for the first time in three years, showing a prominent transformation effect.However, it still faces many challenges, so the transformation will continue, and Dongfeng Limited's integration of Venucia and Infiniti is by no means the last move.

Some analysts pointed out that after integrating the three major brands of Nissan, Venucia and Infiniti, Dongfeng Co., Ltd. has focused its main energy on the passenger car business.After this round of equity transfer of Dongfeng shares, the future operation of the company will be more efficient and more targeted.

Improve the company's earnings and prepare for the adjustment of the share ratio?

Five years ago, Dongfeng Co., Ltd. transferred 51% of Zhengzhou Nissan's shares to Dongfeng Co., Ltd. The main reason is that the performance of Zhengzhou Nissan has been declining year after year, resulting in damage to shareholders' interests.Today, Dongfeng Co., Ltd. has let Dongfeng Co., Ltd. leave, and I am afraid it has the same consideration.

In Nissan's "Nissan Next" corporate transformation plan, "Quality Management" is one of the core keywords.

In 2022, Dongfeng Co., Ltd. has established a dual growth target for D30 sales and profits, and one of the most important tasks is to improve earnings.

Although in the past two years, the light commercial vehicle business segment dominated by Dongfeng shares has achieved sales growth, which is much better than the two consecutive declines in the passenger vehicle business segment, but its performance has not been satisfactory, and it has not been a good example for Dongfeng. Limited additions.

According to the financial report data, Dongfeng will achieve revenue of 15.55 billion yuan in 2021, a year-on-year increase of 13.23%, but the net profit attributable to the parent company is 372 million yuan, a year-on-year decrease of 32.84%.

In the first quarter of this year, the company's operating income was 3.59 billion yuan, down 9.5% year-on-year, and the net profit attributable to the parent company was 120 million yuan, down 56.55% year-on-year.

By transferring the equity of Dongfeng shares to Dongfeng Motor Group, firstly, Dongfeng Co., Ltd. will get a sum of cash, and secondly, it will be able to get rid of the performance burden, which is obviously what the Japanese side wants to see more.

In addition, Zhang Xiang, dean of the New Energy VehicleTechnology Research Institute of Jiangxi New Energy Technology Vocational Collegeand an automobile analyst, told Fenghuang.com that for Dongfeng Co., Ltd., the light commercial vehicle sector was part of the previous joint venture policy. The Japanese side naturally hopes to get rid of this business and prepare for the increase in the share ratio.

At present, BMW Brilliance has become the first car company to increase the shareholding ratio of foreign joint ventures.Behind him, many foreign-funded companies such as Mercedes-Benz, Hyundai, Volkswagen, Audi, etc. are rumored to intend to increase their shareholding ratios.

Dongfeng Co., Ltd. was established in 2003, and Dongfeng Motor Group Co., Ltd. and Nissan Motor Co., Ltd. each own 50% of the shares.If Nissan does not have the idea of ​​raising its shareholding ratio, I believe most people will not believe it.After all, in the "Nissan Next" enterprise transformation plan, China is regarded as the most important market in the world.

For Nissan, the removal of the commercial vehicle segment in the joint venture will make the structure of Dongfeng Co., Ltd. more streamlined, which will help increase the company's performance quickly after increasing its shareholding ratio.

After the Dongfeng shares were cut off, in addition to Dongfeng Nissan Passenger Vehicle Company, Dongfeng Co., Ltd. has two main business lines, namely Zhengzhou Nissan Automobile Co., Ltd., and Dongfeng Auto Parts (Group) Co., Ltd. The big Dongfeng Yulong used car replacement Co., Ltd.

We might as well guess whether the next step of Dongfeng Limited's reform will target Zhengzhou Nissan or Dongfeng Parts?