Dongfeng Motor looks to maintain growth at home and abroad

Dengfeng Motor and PSA Peugeot Citroen signed a global strategic partnership agreement on March 28 in Beijing to deepen cooperation in international businesses, product and technology coordination and supplier systems. Photos Provided to China Daily

Proprietary products, international cooperation, innovative management and business restructuring are some of Dongfeng Motor Corp's key strategies to maintain sustainable growth in domestic and international markets.

Last year the Wuhan company sold 3.5 million vehicles, which ranked it second nationwide, with revenue of 453.4 billion yuan ($73.8 billion).

The firm's proprietary brand Dongfeng sold 1.27 million units, an increase of 13.4 percent year-on-year, which made it the second largest among all domestic brands. These included 655,600 Dongfeng passenger vehicles, up 27.3 percent year-on-year.

At the same time, sales of the company's middle and heavy-duty commercial vehicles topped the nation for the 10th consecutive year.

The company ranked 113th place in the list of 2014 Fortune 500 companies, and was 17th in China's top 500.

Company executives said that proprietary brands were the priority for upgrading their business structure. They said a "balanced development model" was needed to focus on overall planning and management on one hand and market sensitivity of diverse sectors on the other.

In 2011 Dongfeng Motor mapped out its proprietary product strategy, which centered on the Qian D300 program unveiled on Dec 10 that year.

According to the program, sales of the company's proprietary brand passenger vehicles will "consistently stay in the first tier" in the domestic market. The Dongfeng brand is expected to achieve sales of 3 million units by 2016, while sales of commercial vehicles are expected to top the nation and enter the top three worldwide.

To achieve the targets, the company divided its efforts in the proprietary passenger vehicle business into three aspects - the Dongfeng brand, the Luxgen brand based on the partnership with Taiwan-headquartered Yulon Motor Co and other proprietary brands from its many joint ventures.

Optimizing resources

The company's plan was the result of optimizing all of its resources in the passenger vehicle sector, which will serve as a solid foundation for its proprietary product strategy, said company executives.

They said that China cannot successfully upgrade its automobile industry without using global resources and Dongfeng Motor has always tried to enhance its competence and ability to withstand risks by comprehensive global cooperation.

In September 2012, the company acquired T Engineering AB in Sweden, which marked its first R&D base overseas. Following that, the firm signed agreements with German transmission and drive system maker Getrag Corporate Group to jointly develop clutch and transmission systems.

On Nov 16, 2012, a joint venture was founded by Dongfeng Motor and Schmitz Cargobull in Germany, a world leader in the semi-trailer industry. The partnership was expected to improve the technology of Dongfeng commercial vehicles and promote Dongfeng's overseas expansion in the sector.

Dongfeng Motor established a strategic alliance with Volvo on Jan 26, 2013. The firm then reorganized its commercial vehicle company, with ownership of 55 percent in the partnership. Both sides joined hands to improve the international competitiveness of Dongfeng commercial vehicles.

On March 26, Dongfeng signed an agreement with PSA Peugeot Citroen Group in Paris and invested 800 million euros ($1 billion) to stand side by side with the French government and the Peugeot family as PSA's largest shareholders.

Two days after that, another agreement was signed in Beijing that said the two sides would deepen cooperation in international businesses, product and technology coordination and supplier systems.

Dongfeng executives said that the collaboration with PSA was a milestone in the progress of Chinese auto companies' global development as it was no longer just about capital merging. Instead, both parties share intellectual properties with a 50-50 R&D partnership. It was the first project in China to use domestic production capacity to expand the global market.

During the 2012 Beijing auto show, Dongfeng Motor unveiled its mid-term overseas development plan called DH310.

The company established an international business department to manage its overseas offices and make plans for its export-oriented products, overseas image as well as international markets and services.

In 2011 Dongfeng Motor founded a factory in Iran and a subsidiary in Russia. Many of its products, including trucks, pickups and passenger vehicles, have been well received in overseas markets such as Venezuela, Iran and Brazil.

Contact the writers through zhangzhao@chinadaily.com.cn