Dongfeng and Volvo will resume joint venture negotiations
Sinotruk and German Man Corporation (Shortly referred to as Mann) recently reached a strategic cooperation agreement and received extensive attention in the industry. Affected by this, Chinese and foreign companies in addition to Shaanxi Auto, there is also the Volvo Group (Volvo) jointly established with China National Heavy Duty Truck Group and Volvo's next cooperation goal, Dongfeng. Although neither Dongfeng nor Volvo officially stated their position on restarting the joint venture negotiation, industry analysts believe that the possibility of resuming the frontier is greater than ever before.
â– The road to Volvo in China is not smooth
Compared to Mercedes-Benz and Mann, who are also international heavy truck giants, Volvo and its Chinese partners formed a joint venture earlier, but they did not taste the success in the Chinese market.
Jinan Huawo Truck Co., Ltd. (referred to as Jinan Huawo) is the crystallization of 9 years of negotiations between Sinotruk Group and Volvo. However, this heavy truck joint venture company was not listed long after it disappeared. After the establishment of the company in 2003, due to the disagreement between the management concepts of the two parties and the over-pricing of the products, the joint venture that was once highly hoped for by the parties was suspended indefinitely after only two years of operation .
After the plan of Huada’s grand plan was defeated, Volvo began to look for new partners and Dongfeng entered its vision. In 2007, Volvo signed a non-binding framework agreement with Dongfeng Motor Co., Ltd., and plans to cooperate in the field of heavy-duty trucks and engines. In fact, Dongfeng Motor Co., Ltd. had been negotiating with Renault Trucks of AB Volvo since 2004 to discuss the possibility of joint venture of Dongfeng Liuzhou Automobile and Renault and introduction of Renault vehicle technology and main assembly. However, due to the fact that both parties still have capital and equity issues that need to be resolved, no agreement can be reached on the cooperation ideas, and the cooperation between the two parties will eventually disappear.
After Man announced the acquisition of a stake of 25% plus one share of Sinotruk, there is news that Volvo and China National Heavy Duty Truck Group may have reached an agreement on Jinan Huawo issue. In the eyes of the outside world, this move has made Volvo a little embarrassing, but it may make a turn for the road to development in China. Volvo will withdraw from Jinan Huawo, which will free up a joint venture quota and open the door for the cooperation of Eastwo which has been stranded for several times.
â– Dongfeng commercial vehicles have joint venture needs
As the largest automotive joint venture in the country, Dongfeng Co., Ltd. has not only introduced technology but also introduced Nissan's QCD management model in its overall joint venture with Nissan. The affiliated companies of the joint venture company have been significantly improved both in terms of management level and operation quality. In particular, the passenger vehicle segment has formed a relatively strong competitiveness in the country. In contrast, the commercial vehicle segment lags behind Nissan's own short board and has not received much support for product technology.
Dongfeng Company once co-sponsored the establishment of Dongfeng Nissan Diesel, the first domestic heavy truck joint venture, with four shareholders such as Nissan Diesel in 1996, but the company has long been in a state of silence. Due to high product prices and narrow market adaptation, sales have been low at low levels. After the joint venture between Dongfeng and Nissan, Dongfeng Nissan Chai, which was determined to be the bridgehead of the cooperation between the two parties, failed to achieve its goal and became increasingly marginalized in the joint venture system of Dongfeng Co., Ltd.
In 2006, Dongfeng Commercial Vehicles merged advanced technologies on the basis of self-reliance and launched the Tianlong heavy truck, which greatly increased the product platform strength of Dongfeng Commercial Vehicles. The engine technology of the Tianlong heavy truck is derived from the Renault dci11 engine, and the cab is jointly developed with the Japanese company. This combination of Japanese and European technology products has a good market performance, but it is still slightly different from the European heavy truck. .
In the face of the increasing strength of CNHTC and FAW Liberation, DFG, which ranks among the top 3 in the global automotive industry, is eager to comprehensively upgrade the technical and management level of commercial vehicle platforms. Cooperation with international heavy truck giants has become a topic. meaning.
Although the Dongfeng-Cummins joint-venture engine company can provide reliable power for Dongfeng commercial vehicles, and it will not be subject to upgrading of emission standards, Dongfeng is even more eager to use its engine technology in its own hands. Dongfeng's willingness to accept Volvo's cooperative olive branch is exactly what Volvo’s technical strength is. If Dongfeng Commercial Vehicle is introduced into Volvo's Euro IV and Euro V engines and vehicle technology and key assembly, it is bound to be even more powerful and product competitiveness will be significantly improved, which is expected to shake up the domestic heavy truck market.
â– Dongwo cooperation emphasizes mutual benefit and win-win
From several contacts between Dongfeng and Volvo in recent years, Volvo appears to be more urgent than Dongfeng for cooperation between the two sides. Contrasting with the ever-shrinking European and American truck market, China’s heavy-duty truck market has strong demand and huge potential. It has become one of the few bright spots in the global heavy-duty truck market. Volvo faced this tempting cake but couldn't help it.
According to industry insiders, although the probability of cooperation between the East and the West is very high, whether or not the wish can be turned into reality, Volvo still has many problems to solve. On the one hand, Volvo needs to sum up experiences and lessons learned in the development of China in these years and face up to the rising market position of Chinese partners, and regard mutual benefits and mutual benefits as the basis for cooperation. If Volvo still insists on a strong stance and ignores the concerns of Chinese partners, such cooperation will be difficult to sustain no matter when and with whom.
On the other hand, other domestic Sino-foreign joint ventures and cooperative enterprises, including SAIC Iveco Hongyan, the recent cooperation between Sinotruk and MAN, and the cooperation between Foton and Mercedes-Benz, both retained China's own brand. For Dongfeng, it is more important to regard its own brand as a life, and it is inevitable to retain the Dongfeng brand.
The first thing Volvo needs to solve now is the issue of Jinan Huawo. According to sources, Volvo and China National Heavy Duty Truck Group's handling of the separation and the resumption of cooperation with Dongfeng, do not rule out simultaneous. For Dongwo cooperation method, industry insiders analyzed that since Dongfeng Commercial Vehicle belongs to Dongfeng Co., Ltd., if Volvo adopts the cooperation model between Sinotruk and Man, there is a certain degree of difficulty in handling the equity relationship. Therefore, under the premise of retaining Dongfeng's own brand, using a traditional joint venture model to establish a 50:50 joint venture company is not impossible.
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