“The Dongfeng commercial vehicle joint venture project originally planned to complete the asset delivery on April 1th failed to be completed as scheduled.†Insiders of Dongfeng commercial vehicles told reporters.
At present, the project is still in the stage of repurchasing the mid- and heavy-duty commercial vehicle business and assets from Dongfeng Motor Co., Ltd. (Dongfeng Limited), a joint venture with Nissan.
At the end of January last year, Dongfeng Motor Group Co., Ltd. (referred to as Dongfeng Group) and Volvo Group (ABVolvo) formally held hands in Beijing. According to the agreement, the two sides will establish a strategic alliance that uses capital as a link, and will work together to develop the world's leading "Dongfeng" brand commercial vehicle.
The most substantial cooperation project of the strategic alliance is the establishment of Dongfeng Commercial Vehicle Co., Ltd. with a 55% and 45% equity ratio. However, before Volvo purchased 45% of the equity of the joint venture company, Dongfeng Commercial Vehicle Co., Ltd. needs to first complete the transaction of commercial vehicle assets with Dongfeng.
The CEO of the Volvo Group of the Dongfeng Commercial Vehicles joint venture project, Eurof Payson, said recently that the transaction needs to be approved by the relevant Chinese and EU governments. Once the details of the approval are settled, both parties will consider introducing new technologies and products. Pricing and other strategies, products cover medium and heavy trucks, passenger cars, engines, transmissions and so on.
Complex asset delivery
The reporter confirmed from the investor relations person in charge of Dongfeng Group that Dongfeng and Volvo’s commercial vehicle joint venture project is still in the stage of asset delivery.
Recently, Dongfeng and the Renault-Nissan alliance's second passenger car joint venture Dongfeng Renault originally scheduled for the ground-breaking ceremony on March 20 also failed to complete due to approval. For Carlos Ghosn, CEO of Renault-Nissan Alliance, Nissan’s current goal in China is to catch up with GM and Volkswagen and become the largest passenger car brand in China. This requires Nissan, Renault and Infiniti to jointly compete in the Chinese market.
Ghosn's plans are inseparable from Dongfeng’s full support. When Infiniti was announced in Xiangyang last year, it was reported that “Nissan has agreed to solo commercial vehicles in Dongfengâ€. Even in the industry, there is a claim that Renault-Nissan agreed to give up Dongfeng’s limited commercial vehicle business.
When the Dongfeng Renault joint venture project has not been approved by the relevant ministries and commissions, the delivery of Dongfeng commercial vehicle assets also faces various approval procedures.
At the beginning of April, according to a report from the Shibu Industrial and Commercial Bureau in Hubei Province, the registration of the Dongfeng Commercial Vehicle Co., Ltd. and its affiliated companies involved in the joint venture project has all been completed at the request of the local government “Special Agentsâ€. The completion node required by Shiyan City Council was advanced by 9 days.
At present, Dongfeng Commercial Vehicle Co., Ltd. has increased its capital, changed the scope of its business, established two branches, and has gone through the registration procedures for the changes in the ownership of four subsidiaries (one of which is registered in the Hi-Tech Development Division).
As part of the 9.2 billion yuan capital injection, Dongfeng Commercial Vehicle Co., Ltd. invested RMB 2 billion in the first phase for early repurchase. The difficulty before the Dongfeng Group was: Once Dongfeng decided to completely spin off Dongfeng’s limited medium-to-heavy truck business, it may face a situation where Nissan is asking for premium prices.
As a listed central enterprise, Dongfeng Group must face challenges from all parties and can not do a loss-making trade. On the one hand, it should try to lower the price of repurchasing Dongfeng Limited's commercial vehicle assets. On the other hand, it should try hard to increase Volvo's entry fee.
According to a previously announced announcement by Dongfeng Group, the company and its subsidiaries will repurchase Dongfeng Motor's commercial vehicles and other businesses for a total consideration of RMB 11.7 billion. After the repurchase, most of the business and assets will be transferred to the new Dongfeng Commercial Vehicle Company, and then the Volvo Group will invest 5.6 billion yuan to acquire 45% of the company's shares from Dongfeng Group.
Obviously, before entering the marriage hall with Volvo, Dongfeng was faced with a series of complicated and huge assets delivery. It first bought back from Dongfeng Limited, a joint venture subsidiary, and transferred 45% equity to Volvo. All this must wait for approval from the relevant national ministries and commissions.
The project will start next year
According to the opinion of Eurof Payson, according to the current approval progress, the Dongfeng Volvo joint venture project will be officially launched in early 2014.
In this round of international truck manufacturers entering the Chinese market, the United States Navistar, Germany Daimler are activists of the joint venture route, Volvo Group will naturally not miss the potential of the Chinese market.
In view of the ups and downs of the commercial vehicle industry, Europa Persson believes that the ups and downs of the Chinese truck market are the laws of the automobile market. “Whether it is in the past two years or in the future there may be ups and downs, it is a natural thing to happen. The strategic alliance we have formed with Dongfeng is a long-term commitment and planning, and we will achieve adaptive development based on the development of domestic and foreign markets."
In addition, in the Dongfeng “Dry D300†plan, Dongfeng brand commercial vehicles will reach 1 million units in 2016, which also requires Dongfeng to look for more technically competent partners in the truck field.
For many years, Dongfeng commercial vehicle projects have been categorized as Dongfeng Limited and belong to the Dongfeng Group's second-tier subsidiary. Nissan Motor Co., which has made little contribution to the Dongfeng commercial vehicle technology, has enjoyed half the benefits.
The Volvo Group has also announced its new truck business development strategy, which includes the development of new low-end truck series for growing emerging markets and will be introduced to the market in the coming years. Especially in the context of the forthcoming implementation of the diesel IV standard, Volvo Reserve's SCR technology is urgently needed for Dongfeng commercial vehicles.
In 2007, the Volvo Group became a shareholder of Dongfeng Nissan Diesel by acquiring Japanese truck manufacturer Nissan Diesel. Prior to this, Renault’s Renault trucks and Mark trucks were all in the pocket of Volvo, which currently owns four truck brands, Volvo Trucks, Renault Trucks, Nissan Diesel, and Mark Trucks.
At the end of 2009, Volvo issued a statement saying that it had terminated cooperation with China National Heavy Duty Truck. Since then, Volvo has started looking for new partners. In the eyes of Volvo Group executives, Dongfeng Nissan Diesel has established a good foundation of trust for further cooperation between Volvo and Dongfeng.
In order to ensure the smooth implementation of the acquisition of commercial vehicles such as Dongfeng Limited, Dongfeng Group established a wholly-owned subsidiary Dongfeng Commercial Vehicle Co., Ltd. (which is a joint-venture commercial vehicle company with Volvo) in cash on January 16. According to the registration information of the Bureau of Industry and Commerce, Tong Dongcheng, Vice President of Dongfeng Motor Company, acted as legal representative of Dongfeng Commercial Vehicle Co., Ltd.
In accordance with the general rules, legal persons usually serve as the chairman. Tong Dongcheng is the Chairman of the test field Dongfeng Nissan Diesel Co., Ltd., who is fully cooperating with Volvo. Dongfeng Nissan Diesel will also be included in the new Dongfeng Commercial Vehicle Company. Dong Gang, the current general manager of Dongfeng Commercial Vehicles, continues to serve as general manager.
Tong Dongcheng pointed out that during the five-year transition plan of Dongfeng Nissan Chai, the business collaboration discussed by both parties in the previous period was reflected in the implementation of the transformation.
As of now, the Dongfeng commercial vehicle Shiyan base is still producing as usual. The workers are looking forward to what Volvo can bring to this company. They also hope that the joint venture with Volvo will bring powerful technologies and huge profits.
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