Dongfeng reorganization of Fuqi layout Southeastern car companies to accelerate the strategic restructuring


After several twists and turns, the strategic reorganization of Dongfeng Motor and Fuqi Group finally settled on May 16th. The two parties formally signed the Fuqi reorganization agreement in Fuzhou, Fujian. Dongfeng Motor Co., Ltd. will acquire a 45% stake in Fuqi Group held by the Fujian Provincial State-owned Assets Supervision and Administration Commission in a capital increase manner to achieve cooperation at the Fuqi Group level. At the same time, Dongfeng Motor Company and Fuqi Group will form Southeast Asia (Fujian) Automobile Industry Co., Ltd. in the form of an investment company.

Southeast Car Exchange

According to the framework agreement signed by the two parties, Dongfeng Motor will acquire 45% equity of Fuqi Group held by the Fujian Provincial State-owned Assets Supervision and Administration Commission in a capital increase manner and achieve cooperation at the Fuqi Group level. If Fuhou's production and sales volume reaches 300,000 units, it will increase to 60%.

Dongfeng Motor Corporation and Fuzhou Automobile Group held the Southeast (Fujian) Automobile Industry Co., Ltd. in the form of an investment company to realize Southeast Automobile Holdings, a subsidiary of Fuzhou Automobile. The specific method is that the investment company holds 50% of the equity of Dongfang Automobile, Dongfeng will use the transferred Fufang Group to hold part of the equity of Southeast Auto and capital increase, and it will account for 2/3 of the equity of the investment company. The remaining 1/3 of the equity will be owned by Fuqi.

In fact, Dongfeng Motor has long been interested in reorganizing Southeast Automobile, which is owned by Fuqi Automobile. However, it is a joint venture company with 50%, 25%, and 25% shares held by Fuqi Group, Mitsubishi Motors, and China Motors respectively. The equity is complicated but unsuccessful. Dongfeng Motor said that this signing will further optimize Dongfeng’s business layout in the southeastern coastal areas and improve Dongfeng Passenger Vehicles, commercial vehicles, powertrains, key auto parts and automotive level businesses. It is understood that 2015 will be another important timeline for the cooperation between the two sides. There will be the first practical cooperation results and there will be continuous cooperation in 2017 and 2020.

Good for Dongfeng's "great autonomy"

For Dongfeng, "grand autonomy" remains its top priority. In 2015, if we want to achieve the production and sales target of 2 million vehicles, we must certainly continue to rely on external resources and internal resources to integrate development. Industry experts stated that Fujian will become another strategic base for Guangdong's post-Eastern winds in the south. Dongfeng will expand its layout and further enhance the Group's position and influence. At the same time, it can also use its geographical advantages to accelerate the advancement of overseas businesses.

In addition, the self-owned brand sedan of South East Automotive and the recently launched micro-vehicle will also bring a business segment of Dongfeng Motor to increase its own brand. “Dongfeng and Fuqi will cooperate on two levels, including holding shares at the Fuqi Group level and adjusting Dongfang Automobile’s equity level at Fuzhou Automobile Co., Ltd.” said Liu Weidong, deputy general manager of Dongfeng Motor Corporation. The state is still relatively good, and it will be beneficial to Dongfeng Motor's 'large autonomy' strategy and the development of the Fujian automobile industry."

Car company mergers and reorganization accelerate

At the same time that Dongfeng Motor and Fuqi Group “married” together, the reorganization of the automobile industry came with the latest “war situation”. Recently, the Yichang Municipal Government, GAC Group and Zhongxing Auto's "Ichang Automobile Base Project Cooperation Agreement and the Ark Off-Line Ceremony for the City Ark" were held in Yichang. According to the signed agreement, the above-mentioned three parties will carry out comprehensive cooperation in the field of auto parts, vehicle manufacturing and sales, and develop the project of the Yichang automobile industry. With the availability of relevant resources, it is expected that in the future, an overall production capacity of more than 450,000 sets of completed vehicles will be produced in Yichang in the future.

"Establishing a cooperative relationship is conducive to the integration of resource advantages, enhancing the company's core competitiveness, and promoting the structural adjustment and industrial upgrading of China's auto industry," said Zhang Fangyou, chairman of Guangzhou Automobile Group.

In fact, the Chinese automobile industry has long been faced with a problem of low concentration. In the production of more than 1,000 vehicles of various types, the output of some enterprises is minimal or even zero; however, there are still more than 130 vehicle companies and their resources are scattered. Affected the development of China's auto industry.

During the “Twelfth Five-Year Plan” period, a number of ministries and commissions of the country will jointly promote the consolidation of eight industries, including automobiles, and cross-regional mergers and acquisitions, and the automobile will also become a key breakthrough point. The strategic cooperation between Dongfeng and Fuqi will play an important role in promoting the restructuring and transformation of the automobile industry.



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