In the 156th batch of vehicle manufacturers and product admittance catalogs announced by the National Development and Reform Commission recently, 17 sedan brands and 39 new cars were awarded “Enrollment Cards†by the National Development and Reform Commission. Among them, Hafei Motors has a total of 6 models, making it the largest company in this list.
On November 28, 2007, Dongfeng Motor issued a 2.1 billion yuan one-year short-term financing bill, and Dongfeng subsequently signed an agreement with AviChina to purchase Hafei Motors. As this agreement does not involve Changhe Automotive, another business under AVIC, Dongfeng’s acquisition of CNAC’s entire vehicle assets has been temporarily suspended.
According to the development plan previously determined by Dongfeng Motor’s Board of Directors, Dongfeng will open three fronts including expanding resources, improving cost competitiveness, and managing innovation in the next five years. According to Zhu Fushou, general manager of Dongfeng Motor, “Dongfeng does not rule out acquisitions in the industry. Cooperation, restructuring, etc. The basis of major cooperation is that both sides must be able to form complementary relationships."
Dongfeng not "changhe"
All along, AviChina has attempted to achieve the common development of both by combining Hafei and Changhe, but fundamentally speaking, the closeness and competitiveness of the products of the two companies have made this effort in vain. Once Dongfeng receives Changhe and Hafei at the same time, Dongfeng also faces such problems. In addition to its Dongfeng Pan’an, only in the mini-vehicle area, Dongfeng will have great troubles in coordinating the three.
According to the data from the China Association of Automobile Manufacturers, Changhe Automobile Co., Ltd. sold 89,049 vehicles in the first half of 2007, a year-on-year decrease of 11.4%; of these, 34,785 were saloon sales, a year-on-year decrease of 16.3%. In 2006, Changhe Co., Ltd.'s net profit loss reached 226 million yuan.
Unlike Changhe, Hafei has not experienced significant growth in sales, but it still holds the top spot for sales of more than 200,000 units in the first 11 months of last year. In terms of enterprise development, Hafei and Changhe also took two different paths. The former is autonomous and the latter has the support of Suzuki.
The 2008 Changhe Automotive Supplier Conference was held in Chengdu a few days ago. "In 2008, Changhe Automotive will focus on the product strategy of small-displacement vehicles." Li Yao, chairman of the new Changhe Automobile and Changhe Suzuki, made it clear.
The next step is Dongan Power
In the latest product list of the NDRC, six Hafei new cars are on the list. In addition to well-known mini cars and sedans, Hafei has also expanded its business vehicles. After that, Hafei and PSA signed a letter of intent for the production of commercial vehicles.
"More importantly, the acquisition of Hafei Motors, Dongfeng Group can also make achievements in the engine area and provide more support for Dongfeng Future's own brand base," a securities analyst told the reporter. Through mergers and acquisitions of Hafei Motors, Dongfeng has the opportunity to get the high-quality assets of China Aviation Engineering Corporation, Dongan Power (600178 Quotes, stocks).
Dongan Mitsubishi, which is currently owned by Dongan Power, has only completed production for the entire year in the first half of 2007. It is expected that 300,000 engines will be produced and sold this year. At present, Huachen Junjie, BYD F3, Fukami Heart Edition, Hafei Saibao, Zotye 2008, Southeast lionseye and more than 20 independent brand models are equipped with Dongan Mitsubishi's powertrain.
“Not only profits from Dongan Power's fishermen are accepted, but once Hafei's acquisition is successful, Dongfeng can completely build a new independent brand base in Harbin, so that Dongan Power may become another engine base for Dongfeng.†The above sources believe. As early as 2004, Hafei and Dongan, which had been separated for 52 years, came together to form Harbin Aviation Industry (Group) Co., Ltd.
It is worth noting that in the first three quarters of this year, the sales of "Dongfeng Motor" engines increased by 44.5% year-on-year, which contributed a lot to the company's profits. The cluster of parts and components established by the Dongfeng Group around the joint venture has gradually become a climate. "The next step in the competition among the three major groups is more reflected in the parts and components systems built around the joint ventures and their own independent brand competition," said one industry insider.
In any case, as a central state-owned enterprise directly under the SASAC, Dongfeng and AVIC II's negotiations on the automotive business are in line with the restructuring of central SOEs and the general trend of becoming bigger and stronger. "The government-led forces can not be ignored. Dongfeng has become a major player in Hafei. This will help change the domestic and foreign automobile companies' large and small mess, which will help their own brands become bigger and stronger."
Greater plot
According to SAIC's plan, SAIC Motor's total sales in 2007 will reach 1.5 million. Industry insiders predict that with the strength of SAIC and NAC, an automobile carrier with an annual output of 2 million will be born in the Yangtze River Delta region. At the same time, due to the strong pull of Volkswagen and Toyota, the sales target of 1.3 million vehicles in 2007 is no doubt for FAW.
Compared with the two, Dongfeng’s strength is slightly weaker. In the first 11 months of 2007, although the Dongfeng Group achieved a milestone in advance ahead of schedule, the distance from SAIC and FAW is increasing.
In the field of cars, Dongfeng lacks a “dark horse†that is not only fast and has become a climate, but the dependence on Nissan, PSA, Honda, and other partners has allowed Dongfeng Group to play a small role in this area. In the area of ​​mini-vehicles, commercial vehicles, and future self-owned brand passenger cars, the situation is different. This leaves the East Wind a chance to surpass.
In 2007, among the three major groups, the overall advantage of Dongfeng Commercial Vehicles was fairly obvious. In the first 11 months, the overall sales of Dongfeng Commercial Vehicles reached 310,000, ranking second only to Beiqi Foton. In the area of ​​minicars, FAW teamed up with each other for a long time, and Dongfeng Junan has begun to exert force. Both are struggling to catch up with SAIC-GM-Wuling and need to achieve leapfrog development.
Obviously, the merger and acquisition of Hafei has provided a possibility for the leapfrog development of Dongfeng. In addition to the mini vehicle sector, Dongfeng has faced unprecedented opportunities in its own brand base, strategic layout, overall listing, and scale expansion.
"From the geographical location of Dongfeng, it is too much hope that there will be a coastal production base." People familiar with Dongfeng told reporters. Hafei's base in Shenzhen can make this ideal of Dongfeng a reality. Not only that, Dongfeng can also develop the site in Northeast China through Hafei's base in Harbin.
The far-reaching impact of Dongfeng Motor’s acquisition of Hafei Automobile is the integration of the listed capital of the two parties. Dongfeng Group may choose to purchase Hafei's entire vehicle business through domestic Dongfeng Motor, from spare parts to complete vehicles, to imitate Shanghai Automotive (Group), to achieve overall listing of the Group.
View related topics: Dongfeng Group announced that it will hold "Hafei"
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