Following the signing of the framework cooperation agreement between Dongfeng Motor Corporation (hereinafter referred to as Dongfeng Company) and the Fujian Provincial Government on May 16, Dongfeng Corporation began to conduct audit and asset assessment with Fujian Automobile Industry Group Co., Ltd. (hereinafter referred to as Fuqi Group), followed by Dongfeng will sign the equity transfer agreement and capital increase agreement with the Fujian Provincial Government to hold shares in Fuqi Group.
"At present, this work is still in progress." Dongfeng company related sources told reporters. According to the agreement between the two parties, Dongfeng Motor will once again accept the transfer of equity from the Fujian State-owned Assets Supervision and Administration Commission, and will become the controlling shareholder of Fuqi Group after Dongfang Automobile's Dongfang Automobile Group achieves annual sales of 300,000 vehicles (including engines).
A person of Dongfeng Company told the reporter that "Fujian Base and Guangzhou Base will both become Dongfeng's South Base."
Holding Southeast Automotive
According to statistics from the National Association of Passenger Cars, from January to October this year, the total sales volume of South East Automobile reached 88,900; of which, the cumulative sales volume of South East brand vehicles was 73,600, an increase of 25.7% year-on-year.
Southeast Automotive's market vitality began to recover. In the cooperation framework agreement signed between Dongfeng Company and Fujian Province, the first “start†was Southeast Automotive.
According to Liu Weidong, deputy general manager of Dongfeng Corporation, the production base and market operation of Southeast Automotive are in good condition and can provide favorable support for Dongfeng’s “grand autonomy†strategy.
In order to resolve the complex equity relationship of Southeast Motor, Dongfeng and Fuqi Group formed a new investment company, which together held a 50% stake in South East Automotive. Dongfeng Company held a 2/3 equity interest in the investment company and achieved control over Southeast Automotive. In addition, Mitsubishi Motors still holds a 25% stake in Southeast Motors.
"Mitsubishi's withdrawal (Southeast Automobile), this is an inevitable trend." Auto analyst Zhong Shi believes.
Since Mitsubishi Motors signed a joint venture agreement with Guangzhou Auto Group Co., Ltd. in 2010, Mitsubishi Motors gradually shifted its investment focus to Guangzhou Automobile Mitsubishi. In Southeastern China, Mitsubishi’s figure gradually blurs. Statistics from the Federation of Travel Unions show that from January to October this year, Southeast Motor’s Mitsubishi Motors had sales of 14,300 vehicles, a year-on-year drop of 29.3%.
Southward new production capacity
According to the cooperation plan between the two parties, Dongfeng Motor will also assist Fujian Benz to discuss the introduction of SUVs, MPVs, and other passenger vehicles to Daimler in Germany after holding Fuzhou Automotive Group, and whether Fujian Benz’s Chinese shareholders will change hands and make people think about it.
As for the significance of this integration, Dongfeng Company stated that it will further optimize its business layout on the southeast coast and accumulate group resources. In the future, Fuzhou Automotive Group will promote the Group's business to a new level in the areas of passenger cars, commercial vehicles, powertrains, key auto parts and automotive level businesses, so as to achieve a win-win situation for development.
In terms of investment, Dongfeng Motor will introduce an engine project to settle in Fuzhou and invest in other Dongfeng-based component companies. According to preliminary estimates, the new investment by both parties will reach 20 billion yuan in the future.
Although the investment is very expensive, Dongfeng Company's move shows the significance of its strategic layout. According to statistics from the China Association of Automobile Manufacturers, from January to October this year, SAIC ranked first in terms of sales volume of 4.221 million units, and Dongfeng Motor Corporation ranked second with sales of 2.829 million units. From the sales point of view, Dongfeng Company still has a big gap from SAIC Group.
Industry insiders believe that under the background of the State Council's request for the automobile industry to speed up mergers and reorganizations, the strategic cooperation between the Fujian Provincial Government and Dongfeng Company will play an important role in promoting the restructuring and transformation of the automobile industry.
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