In the micro-growth market environment, Dongfeng Motor is planning to make an important step toward the southeast with the aid of the policy “Dongfeng”.

The reporter recently learned that Dongfeng Motor Company will sign a cooperation agreement with Fuqi Group in September, and the main content of this cooperation agreement will involve the main body plate of passenger cars based on Southeast China Automobile.

"The two parties originally planned to sign the agreement in late August, but due to some details of the agreement was suspended by both parties. At present, it is learned that the two sides will sign a cooperation agreement in the middle of this month." A person close to the Fuqi Group told reporters, "This time The scope of cooperation and restructuring has also been adjusted, mainly for the main body of passenger vehicles, and commercial vehicles and other business segments are not involved.

This also means that Fuqi Group will be split into passenger cars and commercial vehicles, and South East Automobile, which is the asset of passenger vehicles, will be the focus of this merger. With the support of Fujian Province and relevant government departments, Southeast Motors, which is inextricably linked with Yulon of Taiwan in the equity structure, will be underwhelmed by Dongfeng Motor’s income.

Integrate Southeast Southeast Assets

At the Global Automobile Forum held in Chengdu on September 6th, Zhu Fushou, General Manager of Dongfeng Motor Co., which was asked “restructuring progress”, responded that “The reorganization has not yet been confirmed. Dongfeng has always maintained an open attitude toward reorganization while maintaining Careful and prudent style."

He also expressed profoundly that in the past, in the rapidly growing market environment, under the cultural effect of “rather than making chicken heads without phoenix tails”, it was “very difficult” to integrate. “(Now) some are in difficulty. The enterprises must make early determinations, otherwise they will not be merged and reorganized, but will face more severe problems of survival."

Zhu Fushou's tone of benevolence and enthusiasm seems to be a must for the target of mergers and reorganizations. The other party, Fuqi Group, avoided this. However, according to a reporter’s report, under the policy of “grasping of central enterprises” by the Fujian Provincial Government, after more than ten months of contact and negotiation between Dongfeng and Fuzhou, the fabled group’s joint venture company, Southeast Automotive, is still in the fancy.

According to the above, it is close to the Fuqi Group's sources, the final cooperation between Tan Cheng is still holding southeast and the Southeast Auto Base will develop its own brand sedan. At the same time, the geographical advantages of Fuzhou Linhai will undoubtedly bring more help to Dongfeng Motor’s overseas markets.

Not only that, this cooperation will also help Yulon Group, an important partner of Dongfeng Motor, to straighten out its business and equity relationship in China. Dongfeng Yulon, a joint venture with Dongfeng Motors 50:50, has been incorporated into the “autonomy” board by Dongfeng Motor Group. Through this joint venture, Southeast Motors is also expected to be “fully autonomous” in the future.

Fuqi to commercial vehicles

"Following the separation of passenger vehicles, Fuqi Group is mainly engaged in passenger cars, parts and components, and light trucks," said the person close to Fuqi. Fuqi Group's lower-level auto companies include Southeast Automotive, Fujian Daimler, Xiamen Golden Dragon, and the new Longma under construction. The products include cars, MPVs, mini-vehicles, and large and medium-sized passenger cars.

According to data released by the Fuqi Group, in the first half of 2012, Fuzhou Automotive Group completed the sale of 88,033 vehicles, with an operating income of 13.8 billion yuan, which was basically the same as last year. Among them, South East Automotive achieved double sales and profits.

In contrast, Fujian Benz, which is owned by the Fuqi Group, is naturally another important section worth nurturing. But so far, this business sector is still sluggish. Statistics from the National Passenger Vehicles Association show that in the first 8 months of this year, Fujian Benz sales fell across the board, with cumulative sales of 3581 units, down 50.5% year-on-year.

After BAIC and Daimler signed a comprehensive joint venture framework agreement, the positioning of the later renamed "Fujian Benz" remains the high-end commercial vehicle market. Mercedes-Benz brand can still improve the product positioning of Fujian automobile industry, but the future direction is still a problem. Judging from the scale of production capacity, Fujian Benz's annual production capacity of 40,000 vehicles is only an “entry level”. After the introduction of a new auto company exit mechanism by the Ministry of Industry and Information Technology, the consolidation of Fujian Benz will have to be put on the agenda again. In the future, Fujian Benz will introduce new models, including commercial vehicles and school buses.

Xiamen Golden Dragon Motor (600686, SH), which is controlled by Fuqi Group, is regarded as its best quality asset. Jinlong owns three bus companies and is one of the leading companies in China's bus manufacturing industry. This Fuqi Group does not have a commercial vehicle segment. The reorganization has a certain relationship with the strong profitability of Xiamen Golden Dragon.

In addition, the new Ryoma expansion project, which was just approved by the National Development and Reform Commission in August, is expected to be put into production by the end of September. It will mainly produce mini vehicles and engines. In the future, the Xiamen-based Jinlong, which is mainly based on passenger cars, and the new Longma, which is mainly based on micro-vehicles, will restructure the entire vehicle architecture of Fuqi Group.

Mitsubishi's Doubts

The new joint venture between GAC and Mitsubishi, which will soon be listed on the market, and Mitsubishi’s shareholder’s attitude toward Southeast Automotive are also “look silently”.

At present, the company’s share structure is Fuqi, Mitsubishi, and China’s share of 50%, 25%, and 25%, respectively. After Dongfeng’s arrival in the southeast, whether Mitsubishi’s 25% stake is withdrawn has become a focus of attention.

"Mitsubishi did not get new news about the change of shareholder of Southeast Motor," a person from Mitsubishi China told reporters.

In fact, the sales volume of Southeast Mitsubishi Motors imported Mitsubishi products is not satisfactory. Southeast brands of South East Motor and the Mitsubishi brand have already independently operated independently. Their sales networks and licenses have been separated, and they each operate brands and sales.

Statistics from the National Passenger Vehicles Association show that in the first eight months of this year, Southeast Motor’s Mitsubishi branded cars sold 17,418 cars, which accounted for 29% of Southeast Asian car sales, far lower than the accumulated sales of Ling Yue 43615.

Some analysts pointed out that under the background of the establishment of a new joint venture between Guangzhou Automobile and Mitsubishi, coupled with the combined effect of poor sales of Southeast Mitsubishi Motors, Mitsubishi withdraws from Southeast Automotive or sooner or later, Mitsubishi, whose product line is not abundant, has no energy to care about. The joint venture company, specifically a joint venture with GAC Group, is Mitsubishi's only choice.

Compared with other Japanese automakers, Mitsubishi Motors' entire vehicle business in China has been overshadowed by a decline in sales volume and cooperation. Especially in the cooperation with domestic car companies, Mitsubishi Motors usually adopts a technology export strategy. This mode of cooperation of Mitsubishi Motors does not have the same right of discourse in joint ventures as it does with other foreign car companies entering into China. This has also laid down Mitsubishi Motors' future decline.

After Mitsubishi Motors established an equity-equity joint venture with GAC Group, it will continue to hold small proportions of equity in Southeast China Autos, or another new partner. Mitsubishi Motors needs to weigh its China strategy.

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