In the tide of reorganization, painstaking operators often fail to follow their own methods. Unintentionally, the east wind often has unexpected gains. Recently, the reporter received definite news. Due to the plight of the Yulona Zhijie project in preparation, Dongfeng has been invited to intervene and will invest 20% in the previous period. In the future, Na Zhijie will be included in the layout of Dongfeng and become a member of Dongfeng Department.
Dongfeng succeeded
"Acquiring shares in Nazhijie is a matter in which the parent company Dongfeng and Taiwan Yulon are discussing in depth." Hu Dongdong, director of the Dongfeng Group Corporation, said that the details are still unclear and the specific purchase price is unclear.
This reporter learned that Dongfeng will invest in the name of Dongfeng Hangzhou Automobile Co., Ltd. to acquire 20% of Na Zhijie from Zhejiang Zhongyu Group. After the acquisition, Nazhi Jie’s equity ratio is: Yulon 50%, Zhongyu 30%, Dongfeng 20%.
Na Zhijie is a joint venture project initiated by Zhejiang Zhong Yu and Taiwan Yulon Motor Group in 2008. The company plans to invest a total of 4.6 billion yuan, and design a production capacity of 240,000 vehicles. It will produce Taiwan's self-founded Na Zhijie brand cars. According to the plan, the first car will be available by October next year, is a 2.0-liter turbocharged gasoline engine SUV, the next product there are MPV, cars and so on.
However, since the beginning of last year, the national capacity control has been tightened and the Na Zhijie project has not been approved. Under this circumstance, the enthusiasm of Zhejiang Zhongyu slowly cooled down, and the amount of investment agreed upon by both parties was greatly reduced. Seeing the project cooling, the Hangzhou government eager to launch the sedan project is very anxious.
“Hangzhou has come to Dongfeng Company several times to discuss this issue,†said an insider. Due to the cooperation experience with Dongfeng in the Dongfeng Hangzha project and Yulon is also a partner of Dongfeng, the Hangzhou side thought of inviting the Dongfeng to come to the fore and relying on Dongfeng influence to finalize the Na Zhijie project.
After several contacts, Dongfeng gave a positive reply. Informed sources told reporters that Dongfeng Hangqi this company's long-term poor management, Dongfeng hopes to push the boat to save the company. Dongfeng-Hangzhou Automobile Co., Ltd. mainly produces high-end passenger cars and passenger car chassis, and produces middle- and heavy-duty trucks and special-purpose vehicles at the same time. The annual production capacity is 30,000 vehicles. In recent years, the company has not sold well and its market share has been shrinking.
On June 15th, Dongfeng Company signed a strategic cooperation agreement with Hangzhou Municipal Government and Yulon on the “Dongfeng-Hangzhou Automobile Reform and Restructuring†agreement, which included the “Dongfeng into the shareholding of Zhijie†in the reform and reorganization of Dongfeng Hangqi. The vehicle will use the idle capacity of Dongfeng Hangqi and produce it in the existing factory.
Yulon frustrated
Dongfeng’s shareholding means that Yulon’s strategic intentions for many years have been greatly reduced.
At the start of the Na Zhijie project in early 2008, Yulon External stated that he hopes to build the Chinese national car and gain more advantages in government-funded support and government procurement. The more practical intention is that Yulon should establish a base in the Mainland and use the mainland market to expand its own brand.
In a joint venture with Zhejiang Zhongyu, both parties agreed to a 50:50 ratio, and Yulon was responsible for the management and sales network. However, after the strong east wind enters, the situation will inevitably change. In the similar situation of Dongfeng Yueda Kia project, Dongfeng is also only a small shareholder, but has a strong voice.
The introduction of Dongfeng seems to be a last resort for Yulon. In an interview with Taiwanese media, one of Yulon’s senior executives revealed that domestic mergers and reorganizations are encouraged and production capacity is controlled, making it less likely that the Na Zhi Jie project will be approved. In this case, only reorganization can be pursued and joint with existing factories.
This remark reveals the bitterness of Yulon's heart. For years, Yulon Taiwan, which has no technology and no models, has gradually become marginalized. Six years ago, Guangzhou Fengshen, a joint venture between Yulon and Dongfeng, was reorganized into Dongfeng Nissan . Yulon only became a shareholder of Huadu Fengshen Factory; in 2006, Mitsubishi entered into the shareholder's South, making Yulon’s shareholding reduced to 25%. Yulon Ben hopes to create a self-owned brand concept on the Zhejiang project and recover self-esteem. However, after the Dongfeng shares, the idea can only be shelved.
Reputation fades out
In fact, one factor has contributed to Dongfeng’s shareholding in Zhijie – Zhejiang Zhongyu Group intends to fade out of the vehicle sector.
"We recently acquired Wuhan Zhongyu for the production of micro-vehicles." In an interview in early June, Zhou Wenjie, deputy general manager of Dongfeng Motor Co., disclosed. It is reported that Dongfeng has acquired Dongfang Panan’s existing 450-mu production plant and equipment from Wuhan Zhongyu for the production of its own brand of mini-cars.
Zhou Wenjie explained that it was estimated that there was considerable room for growth in the mini-vehicle market a year ago, and that the original production capacity was relatively tight, so the capacity growth was achieved through acquisitions.
Wuhan Zhongyu is a company established by Zhejiang Zhongyu in Wuhan. In 2003, the company acquired Wuhan Wantong's production equipment and license list, and produced a modified Mercedes-Benz commercial vehicle. A person from the Dunkou Development Zone told reporters that when Zhong Yu came in, he wanted to reach 150,000 capacity. However, the production capacity of 150,000 vehicles has not yet been realized. Modified Mercedes-Benz is always just order production.
Recognizing that "retrofitting is a bottomless pit", Wuhan Zhongyu began to seek sales in early 2008 and moved the production line to Hangzhou to continue production of modified Mercedes. After more than one year of operation, Wuhan Zhongyu was finally acquired by Dongfeng. At present, the word of Wuhan Zhongyu has been completely deleted on Zhejiang Zhongyu's website.
After moving to Hangzhou, Zhongyu's auto business still has no improvement. According to a person from the Department of Automobile Promotion Department, only 500 Mercedes-Benz vehicles were sold last year, but its production capacity was 30,000.
Huge investment and economic crisis have made Zhongyu Group think of a complete fade out of the vehicle project. The reporter noted that at the signing ceremony of the "Dongfeng-Hangzhou Automobile Reform and Reorganization" cooperation agreement, the personnel of the Zhongyu Group did not appear, and the relevant officials from Zhejiang and Hangzhou did not mention the reputation in their speeches.
View related topics: China's auto industry recommence mergers and acquisitions wave
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