Dongfeng Motor: Aiming for sales of 5.6 Million Units and 18% market share by 2020

Focus on brand building and new energy vehicles, developing overseas businesses

2016/07/20

Summary
Mid-Term Plan: Aiming to Become China’s Strongest Automobile Company
Projects by brand: focusing on expansion of models and new energy vehicles for both own brands and joint venture brands
Investment trends: accelerating investment plans
Production capacity at major Dongfeng Motor plants
Dongfeng Motor Corporation Group sales volume in China (factory shipments)

Summary

　Dongfeng Motor Corporation Group is China’s second largest OEM. It is engaged in producing and distributing passenger and commercial vehicles. The company known today as Dongfeng Motor was established as Second Automobile Works in 1969, and manufactured commercial vehicles. Currently, the company not only manufactures various passenger and commercial vehicles, but also manufactures engines and auto parts, and even handles logistics as well.

　Dongfeng Motor’s sales have steadily increased, rising to 3.46 million units in 2013, 3.74 million units in 2014, and approximately 3.82 million units in 2015; and its market share in the Chinese automobile market in 2015 was 15.5%. From January to May 2016, the Group has recorded a year-over-year increase of approximately 2.7%, with 1.58 million units, but its market share has declined slightly to 14.7%

　Moving forward, Dongfeng Motor aims to sell 5.6 million units from 2016 to 2020, and to attain an 18% share of the Chinese market. In order to achieve this goal, it will strive to sell 3 million units from its own brands, accelerate its new energy vehicle strategy, and develop overseas markets to increase its international presence.

Correlation Diagram of Dongfeng Motor Corporation Group’s Major Group Companies (% are Investment Ratios)

Mid-Term Plan: Aiming to Become China’s Strongest Automobile Company

Three Visions, Four Challenges

　China’s 13th Five-year Plan (2016-2020) was adopted at the National People's Congress in March 2016, and set the annual average GDP growth rate target at 6.5% or higher. The automobile industry has been listed as one of the pillars for boosting consumption. Moreover, sales of new energy vehicles are to be expanded as the staple of a new industry. Dongfeng Motor has announced “three visions” for the 15 periods of the Five-year Plan.

　In order to achieve these visions, the Group will primarily focus on the four fields listed in the image below and strive to make the “Dongfeng Brand” an influential name in the industry.

Moreover, the following four items have been identified by the company as challenges to be undertaken during the Five-year Plan.

Revising the superiority of commercial vehicles
Increasing the core abilities of commercial vehicles
Gaining superiority in the new energy vehicle field
Resolving innovation bottlenecks

Major initiatives are as follows:

Target Unit Sales Market Share Target Value	During the 13th Five-year Plan, unit sales target has been set at 5.6 million units, and the company is aiming for a market share of 18% in the Chinese market. Dongfeng Motor sold 3.82 million units in 2015, and had a market share of 15.5%.
Target Sales for Own Brands	・During the 13th Five-year Plan, the unit sales target for own brands has been set at 2 million units for passenger vehicles, and 1 million for commercial vehicles, for a total of 3 million units. ・Among those 2 million passenger vehicles, the target for own brand vehicles with the “Shuāng fēiyàn” logo (Dongfeng Fengshen, Dongfeng Liuzhou Motor, Zhengzhou Nissan), has been set at 1 million units, with the other million units being taken up by additional brands (Dongfeng Nissan’s Venucia, Dongfeng Yulong’s Luxgen, Dongfeng Honda’s Ciimo, etc.).
New Energy Vehicle Strategy	・The sales target for new energy vehicles through 2020 has been set at 300 thousand units, with the company aiming for a 15-18% share of the Chinese market. ・The OEM will focus on developing EVs and PHVs through 2020. It may then advance into the field of FCVs, as well as batteries and motors that use new technologies.
Development of Overseas Markets and Internationalization	・Collaboration with foreign companies will be deepened and there will be full cooperation for productive resources such as factories, sales networks, and R&D. ・During the period of the 13th Five-year Plan the automaker will strive to sell 30 thousand units overseas. By 2025, Dongfeng Motor aims to rise from 6th to 3rd place in the number of exported units, and will cover a total of 30 international markets and areas, with a particular focus on developing 10 of them. ・In 2016, the OEM plans to export 50 thousand units.
Information Project	・In 2016, the Group will start its “Thirteenth Five-Year Plan Information Project.” Specifically, this is an initiative to develop an information security framework for fields including equipment, product planning, marketing and sales, production, and distribution, as well as hardware and software. Further aims include clarifying the positioning of data centers to promote the digitalization of functions like connected car service platforms.

Projects by brand: focusing on expansion of models and new energy vehicles for both own brands and joint venture brands

　According to the annual report by Dongfeng Motor’s asset management company “Dongfeng Motor Group Company Limited,” in 2016, the first year of the 13th Five-year Plan, the OEM will develop its own brands and new energy vehicles, work for solid growth of its overseas operations, and enhance other businesses (automobile finance, e-commerce business, used car business, etc.) as well. To this end, the company plans to make total investments of CNY 17.5 billion in 2016 and 2017.

　In the next two years, the automaker plants to release fourteen SUVs (including all-new models and facelifts of existing models), four new energy vehicles, and ten sedans, for a total of thirty passenger vehicle models (all-new models and facelifts of existing models), with ten of these own brand models. Furthermore, for commercial vehicles three series of mid to large-size trucks and one series of light trucks are scheduled for release.

　Dongfeng Automobile Co., Ltd., which includes Zhengzhou Nissan as one of its subsidiaries, will continue to focus on the production and sales of mid/high-end light trucks, and also promote its bus business to further strengthen its lineup. Additionally, Dongfeng Automobile is planning to revise Zhengzhou Nissan’s business management system and revitalize^*1 the company.

　1) In May 2016, Dongfeng Automobile sold its 51% share in its subsidiary Zhengzhou Nissan Ltd. to Dongfeng Motor and Nissan’s joint venture company, Dongfeng Motor Co., Ltd.

　The specific model and development plans for major companies in the Group during the period of the 13th Five-year Plan are as follows:

Dongfeng Passenger Vehicle

2016 sales plan 125 thousand units	・In 2016, Dongfeng Passenger Vehicle plans to sell over 125 thousand units (it sold 95 thousand units in 2015). The company will release two new models under the “SUV + sedans/hatchbacks” product strategy. The first is its flagship high-end sedan, the A9, which was released in June. The second is the AX5 SUV that was announced at the Beijing Motor Show. Moreover, the OEM will expand sales primarily through strategic models such as the AX7 compact SUV, the new A60 compact sedan, and the AX3 small SUV.
2016 sales plan 125 thousand units	・Dongfeng Passenger Vehicle plans to unveil a facelifted Fengshen L60 in September 2016. Additionally, the OEM is planning to release a turbo model of the AX71.4L within the year.
2016 export plans	In 2016, Dongfeng Passenger Vehicle will strive to export 5,000 vehicles, with Russia, Iran, and South America as pilot regions. In 2015, while China’s automobile exports overall have significantly decreased, the Fengshen brand exported 3,507 vehicles.
Product Strategy for “The 13th Five-year Plan” Six models and two engines	・In February 2016, Dongfeng Passenger Vehicle announced its product strategy for the 13th Five-year Plan. During this period the OEM will unveil at least six strategic models and two types of engines. ・The automaker plans to reveal the AX4 in 2017, and AX8 and AX9 in 2018.

Fengshen AX5

Fengshen AX7

Dongfeng Liuzhou

2016 model plans	・In January 2016, Dongfeng Liuzhou Motor revealed the 2016 Joyear S50. It will be offered with engine displacements of 1.5 to 2.0 liters, and be available in seven grades. The 2.0-liter version has a “DFMB20” engine, which is based on PSA’s EW10 engine. The engine was developed in collaboration with Dongfeng Peugeot Citroen Automobile Co., Ltd. as part of Dongfeng Motor's “grand cooperation” strategy.
2016 model plans	・In April 2016, sales started for the Fengxing F600, a next-generation mid-range business model (MPV). The platform is based on the Fengxing CM7. The powertrain is available in two types, with one featuring a 1.5-liter turbo or 2.0 liter engine mated to a six-speed manual transmission. The vehicle produces a maximum output of 100 kW, and a maximum torque of 200 Nm. ・Additionally, the Fengxing SX6, a seven-person SUV based on the S500 platform first unveiled at the Beijing Motor Show, is scheduled for release in summer 2016.
「Fengxing」brand and sales networks	・Dongfeng Liuzhou Motor to sell 350 thousand Fengxing brand vehicles in 2016. As for its sales network, the OEM plans to establish approximately fifty 4S stores (Sales, Spare parts, Service, Survey).

Fengxing F600

Fengxing SX6

Dongfeng Sokon

2016 sales plan 300 thousand vehicles	・The Glory 580 urban SUV that had its unveiling at the Beijing Motor Show in April was released in June. The vehicle is available with 1.5-liter to 1.8-liter engines, and in six grades.
2016 sales plan 300 thousand vehicles	・Dongfeng Sokon plans to sell 300 thousand vehicles in 2016.

Glory 580

Dongfeng Electric Vehicle New energy vehicles

2016 sales and product plan	・In 2016, Dongfeng Electric Vehicle is aiming to sell a minimum of 2,000 vehicles, and a maximum of 4,000. ・For EVs, in 2016 the OEM is planning to release the 2016 E30, the A60 EV standard model, and the A60 EV exclusive edition. The company aims to sell over 1,000 units each of the E30L and A60 EV.
“Vehicles recommended for new energy vehicle popularization” list	On March 10th, 2016, nineteen new Dongfeng Motor models were selected for the “vehicles recommended for new energy vehicle popularization list” (2016, second list). Fifteen models from the Dongfeng brand, three from the Fengshen brand, and one from the Venucia brand were selected. This total is made up of seven are passenger EVs, six EV buses, five EV city buses, and one HV bus.

A60 EV

2015 joint venture brand (passenger vehicles) sales

Dongfeng Motor has joint ventures with the PSA group, Nissan, Honda, Kia, and Yulon that recorded sales of approximately 2.83 million units in 2015 and accounted for 26% of the Group’s sales.

2015年合弁ブランドの販売台数

Dongfeng Nissan

2016 sales plan 1.05-1.08 Million Vehicles	The sales target for 2016 has been set at 1.05 to 1.08 million vehicles, a 7.9% increase in comparison to the 1.02 million sold in 2015.
2016 model plans	Dongfeng Nissan plans to release four models in 2016. In March, it released the Sylphy, in April the Maxima, and in May the Tiida. The Teana is scheduled for release in the second half of 2016.
Model strategy during the 13th Five-year Plan	・From 2016 to 2020, fifteen models are scheduled for release from the Nissan and Venucia brands.

Maxima

Tiida

Zhengzhou Nissan

2016 sales plan	The sales target for 2016 is set at 77 thousand vehicles.
Product strategy during the 13th Five-year Plan	In the next two years, Zhengzhou Nissan plans to release a new Dongfeng Fengdu brand SUV, as well as a new Nissan brand pickup truck.

Dongfeng Infiniti

Target sales for 2016 50 thousand vehicles	・China is Infiniti’s second largest international market, and the OEM will release six new models, including scheduled upgrades. It has set its sales target at 50 thousand vehicles. In 2018 the automaker aims to sell 100 thousand vehicles.

Infiniti QX Sports Inspiration

Dongfeng Honda

2016 sales plan 500 thousand	In February 2016, Dongfeng Honda announced its operating goals for production and sales of 500 thousand vehicles, and sales figures of CNY 66.7 billion.
2016 model plans	・In January 2016 the next-generation Elysion was released. ・In April 2016 the new, tenth-generation Civic 1.5LT was released. A 1.0LT is scheduled for release in the second half of 2016. ・A hatchback version of the Greiz is scheduled for release in the second half of 2016. It will be equipped with a 1.5 liter turbo engine.
Plans for the period of the 13th Five-year Plan.	・The company is planning to construct a third plant with a production capacity of 240 thousand vehicles in Wuhan. ・Dongfeng Honda will expand its dealer network to cover provincial cities. ・Two to three hybrid models are scheduled for release in 2017. At the same time, the OEM will establish an EV platform, and release two EV models in the next three years. ・The CR-V will undergo a model change in 2017. It will have the same 1.5LT engine as the tenth-generation Civic..

Tenth-generation all-new Civic

Dongfeng Peugeot Citroen Automobile

2016 sales plan: approximately 770 thousand vehicles	・The production and sales target for 2016 is set at 765 thousand vehicles. This includes approximately 330 thousand Dongfeng Citroen vehicles, approximately 440 thousand Dongfeng Peugeot vehicles, and 10 thousand own brand vehicles.
2016 model plans	・The new Peugeot 301 was released in January 2016. ・The Citroen C6, Peugeot 308, and Peugeot 3008 were announced in April 2016. ・The new Peugeot 6001 mid-size SUV, the made-in-China overseas model of the 3008, the Peugeot 4008, and the Peugeot 2008 are scheduled for release in the second half of 2016.
5A+ Plan Release of 34 models, and sales of 1.5 million vehicles in 2020	・In May 2016, Dongfeng Peugeot Citroen announced its “5A+ Plan” mid- long-term business plan, which is scheduled to continue until 2020.
	・Three major goals: In 2018, the automaker aims to rank third in the industry for product and service level, and to be number one in 2020. Additionally, the OEM aims to achieve sales revenue of over 100 billion in 2020, and increase productivity 30%.
	・In the next five years, the company will release thirty-four models. Each brand will release a minimum of one to two models annually. Along with enhancing its lineup of sedans and SUVs, Dongfeng Peugeot Citroen will also accelerate the entry into the MPV segment. Additionally, the OEM will consider entering new segments like LCVs as well. ・Of the thirty-four models, five are new energy vehicles. The company plans to launch the E-Elysee electric vehicle in 2017, and a plug-in hybrid vehicle (PHV) in 2019, both of which it showcased at the Beijing Motor Show.
	・As for powertrains, 1.2THP, 1.6THP, and 1.8THP turbo engines that were introduced before 2019 will be fully revised, and a new 1.0THP engine will be introduced to the lineup. R&D will be performed for new transmissions, including DCTs, eight-speed automatic transmissions, six-speed manual transmissions, and automatic transmissions for hybrid vehicles, and these will be equipped in new models. These will lead to fuel consumption improving by 20%, and performance by 15%.
	・Automated driving will advance in stage. In 2016, comprehensive adoption of advanced technologies such as active parking assist, cruise control, and lane keep assist will lead to implementation of drive assistance. In the future, the OEM plans to advance its automated driving technology to a level where it is possible for the driver to not hold the steering wheel in 2018, and to have their eyes closed by 2020.
	・By 2020, all models from subsidiary brands are to feature internet connectivity (Internet of Vehicles).
Announcing a vehicle electrification strategy and revealing two platforms	・Between April to May 2016, Dongfeng Peugeot Citroen announced its vehicle electrification strategy, and revealed the e-CMP and EMP2 global modular platforms, which are being jointly developed with Dongfeng Motor, and are scheduled to be implemented starting from 2019.
	・e-CMP: An EV version of the “CMP(Common Modular Platform)” modular platform used for B- and C-segment vehicles. The platform will be featured on compact city cars, core sedans, and compact SUVs. The first round of EVs will be released in 2019. ・The platform will be featured on four models by 2021.
	・EMP2 (Efficient Modular Platform): A modular platform for C- and D-segment vehicles that is to be adopted for PHV versions of compact cars and premium models. Seven PHVs featuring the EMP2 will be released between 2019 and 2021.

Citroen C6

Ｅ-Elysee

Dongfeng Renault

2016 model plans	・In February 2016, production of the Kadjar C-segment SUV began at the company’s plant in Wuhan, Hubei. The model features the CMF platform that is exclusive to Renault’s AWD SUVs.
2016 model plans	・The D-segment Koleos was announced at the Beijing Motor Show in April 2016. It is scheduled for release in the second half of 2016.
Mass production of EVs in 2017	Production for the joint venture brand’s Fengnuo E300 EV, which was unveiled in April 2016 at the Beijing Motor Show, will begin in 2017 at the Wuhan plant. Upon entering the market, it will be targeted for business use, such as for taxis and official vehicles, and will later be released for private use.
The 13th Five-year Plan period plans	The company has set its sales target at over CNY 40 billion.
	Around ten new models are scheduled for release.
	Dongfeng Renault is aiming for a 3% market share.

Kadjar

Koleos

Dongfeng-Yueda Kia

2016 sales plan 680 thousand units	The company’s 2016 sales plan has been set at 650 to 680 thousand vehicles. In 2015, the OEM set a target for 750 thousand vehicles, but achieved a year-over-year (y/y) decrease of 4.6% to 616 thousand vehicles due to poor sales of its mainstay sedans and hatchbacks. In 2016, Dongfeng-Yueda Kia will attempt to recover sales by focusing on SUV models, which are experiencing growth in the Chinese market.
2016 model plans	・A new SUV, the KX5 (Sportage) was released in March, and in April, the new K3 was announced. ・In June 2016, sales reservations began for the K5 Hybrid, which was unveiled at the Beijing Motor Show. ・Production of an EV model from the self-developed brand HORKI will commence in the second half of 2016. ・Additionally, the new KX2, and a new mid-size SUV will be released.

2016 sales plan 680 thousand units

The company’s 2016 sales plan has been set at 650 to 680 thousand vehicles. In 2015, the OEM set a target for 750 thousand vehicles, but achieved a year-over-year (y/y) decrease of 4.6% to 616 thousand vehicles due to poor sales of its mainstay sedans and hatchbacks. In 2016, Dongfeng-Yueda Kia will attempt to recover sales by focusing on SUV models, which are experiencing growth in the Chinese market.

2016 model plans

・A new SUV, the KX5 (Sportage) was released in March, and in April, the new K3 was announced.
・In June 2016, sales reservations began for the K5 Hybrid, which was unveiled at the Beijing Motor Show.
・Production of an EV model from the self-developed brand HORKI will commence in the second half of 2016.
・Additionally, the new KX2, and a new mid-size SUV will be released.

KX5

K5 Hybrid

Dongfeng Yulon

2016 plans target downsized to 70 thousand	In 2015, Dongfeng Yulon Motor sold over 60 thousand vehicles, which was less than the 70 thousand it had planned for. The SUV Luxgen U6 accounted for 48 thousand vehicles, or 80% of all sales. In 2016, the company’s sales target of 100 thousand vehicles has been reduced to 70 thousand.
2016 model plans	・The company’s core models in 2016 are expected to remain SUVs. In the next one to two years, new SUVs are scheduled to feature a powertrain co-developed by PSA and Dongfeng Motor.
2016 model plans	・Luxgen’s new A-class sedan, the Rui 3, was announced in April 2016 and features Luxgen’s first 1.6 liter engine. The Rui 3 is scheduled for release in September 2016.
2017 sales plan	The OEM has set its 2017 sales target as 100 thousand vehicles, and is aiming an operating margin of 1.5%.

Luxgen U6

New Rui 3

Investment trends: accelerating investment plans

　Since Dongfeng Motor Group acquired 14% of PSA’s shares in February 2014, Dongfeng Peugeot Citroen Automobile Co., Ltd. has continuously started and developed various projects. In the future, the OEM will continue to handle projects that directly involve products, such as continuing to co-develop platforms and improve powertrains, but also make anticipatory investments including signing partnership agreements with regional governments. Dongfeng Renault, the most recent joint venture, completed construction of its Wuhan plant in February 2016 and will start a second phase to double the production capacity. The major investment trends of each respective company will be described below.

Dongfeng Motor Corporation

Dongfeng Motor Corporation	Expansion of testing grounds in Xiangyang City	In February 2016, Dongfeng Motor Corporation started expansion of its automobile testing grounds in Xiangyang City, Hubei province. The company is investing a total of CNY 1.605 billion, and the total lot area is 194 hectares. As of 2015, it was reported to be Asia’s largest testing ground. It has a test track capable of verifying NVH characteristics among other tests, as well as facilities for environmental and wind tunnel tests. According to reports, the testing grounds will be open for use in 2018.

Dongfeng Commercial Vehicle

Dongfeng Commercial Vehicle	CKD production starts in Iran	Dongfeng Motor Group and Iran Khodro Group started CKD production for the Dongfeng Fengshen brand in Iran at the end of 2014. The first models added were the S30 small sedan and the H30 Cross small crossover. In 2015, test-production of 288 units took place, and mass production started in 2016.
	New energy commercial vehicle production project starts in Xinjiang	・In March 2016, Dongfeng Xinjiang Automobile Co., Ltd. commenced preparations for its new energy commercial vehicle production project. Dongfeng Xinjiang Automobile Co., Ltd. is a subsidiary of Dongfeng Commercial Vehicle Company, and primarily manufactures mid- to large-size trucks.
		・Dongfeng Xinjiang Automobile Co., Ltd. has an annual production capacity of 10 thousand mid- to large-size trucks, and the quality of its production lines is on par with Dongfeng’s main plant. The OEM manufactures and sells electric bus chassis, electric garbage trucks, and products for electric delivery vehicles in Xinjiang. The company aims to produce prototypes by the end of June, and officially release the vehicles in 2017.

Dongfeng Liuzho

Dongfeng Liuzhou	New production facility for passenger cars Second phase of construction	In November 2016, the second phase of construction for Dongfeng Liuzhou’s passenger car production facility is scheduled to be completed and will go on stream. After construction is completed, Dongfeng Liuzhou Motor’s annual production capacity will increase from the present 250 thousand vehicles to 500 thousand.
Dongfeng Liuzhou	Commercial vehicle production facility construction	・Construction of a new commercial vehicle production facility started in May 2016. Investments in the first phase totaled CNY 2.18 billion. The plant is scheduled for completion and to go on stream in 2018. It will boast an annual production capacity of 50 thousand mid- to large-size trucks, 135 thousand axle assemblies, 55 thousand rigid suspension, 200 thousand MPV axle assemblies, and 20 thousand sets of hydraulic parts. The facility anticipates annual operating sales of CNY 8.8 billion.