Company to Build New Plant in Zhengzhou
BEIJING, May 28, 2008 – Dongfeng Motor Co., Ltd. (DFL), Nissan’s local partner in China, today announced it’s 2008 to 2012 mid-term business plan for China focused on building a stronger market position and increased global competitiveness.
The ambitious five-year plan, named Plan 13 ("one cubed"), expands on the company’s previous business blueprint, Plan 23 ("two cubed"), under which the company doubled sales volume between 2003 and 2007.
Plan 13 has the following objectives represented by three “1”s:
1. Significant Growth
Further business expansion targeting sales of 1 million vehicles and revenue of RMB 100 billion (USD: 14.5 billion) by 2012
2. Operational Enrichment
1st Class in quality at all levels of product, sales & service and cost competitiveness
3. Trusted Company
Creating 1 company through the formation of a single DFL corporate culture that combines the best of the Dongfeng Group and Nissan
Details of these three objectives are:
DFL sales have grown rapidly in China, reaching 610,000 vehicles in 2007. Based on this growth trend, DFL will target vehicle sales of more than one million units and revenue of RMB 100 billion by 2012. DFL will launch more than 10 new passenger vehicles under the Nissan brand and more than five new light commercial vehicles (LCVs) under both the Nissan and Dongfeng brand names.
Part of the sales growth will be supported by local production at a new LCV plant built by DFL at Zhengzhou in Henan province. Production will start in 2010. DFL, Dongfeng Automobile Co., Ltd. (DFAC) and Nissan (China) Investment Co., Ltd. (NCIC) will invest RMB 1 billion (USD: 145 million), for an installed capacity of more than 120,000 vehicles per year.
In further support of growth, DFL will expand its sales network for both passenger vehicles and LCVs. The number of dealerships will increase from 300 to 420 for passenger vehicles, from 420 to 630 for LCVs and from 250 to 380 for heavy & medium commercial vehicles (H&MCVs) from 2007 by 2012.
Another key element for DFL’s growth strategy will be strengthening of the company’s overseas business to meet commercial vehicle demand in growing markets by doubling the export ratio from 5% in 2007 to more than 10% by 2012 in total sales of LCVs and H&MCVs. Both the number of models and destinations for export will be increased to achieve this objective.
“From combined sales for passenger vehicles and commercial vehicles of 298,000 units in 2003, in line with our business plan, we doubled sales to 610,000 units in 2007,” said Kimiyasu Nakamura, president of DFL. “PLAN 13 aims to accelerate our growth in China based on the foundation of Plan 23. Our goal is to build and maintain a strong position in the Chinese markets.”
DFL’s continued commitment to competitiveness will be achieved through high quality R&D capability, products and sales & service operations. To enhance cost competitiveness, DFL will work towards increasing localization of the passenger vehicles for transmissions, engines and other parts from 70 percent in 2007 to 90 percent in 2012.
Dongfeng Nissan Technical Center will address more engineering functions in addition to current testing and parts localization. And in support of a thoroughly trained dealer body, the Huadu training center will provide product and sales & service education to dealerships focused on customer-oriented management.
A new objective for PLAN 13 is for DFL to become identified and recognized as a “Trusted Company.” A significant element of this will come from the robust DFL corporate culture that will evolve as a unified blend of the working cultures of Dongfeng Group and Nissan. DFL aims to be a trusted company by delivering valuable products and services that meet the needs of stakeholders, including customers, employees, suppliers and shareholders, while meeting the needs of the larger society by meeting environmental and social expectations.
DFL will bring environmental friendly technology to market through all business activities including products and services. The company aims to boost the number of passenger vehicle sold with continuously variable transmissions (CVTs) to 50 percent of sales by 2012.
DFL also will be exploring alternative fuel trucks, such as liquid natural gas (LNG).
DFL will continue work on STAR WINGS, the new navigation system that will be available with the new Nissan Teana. STAR WINGS is a cooperative project between Nissan and the Beijing Transportation Information Center (BTIC) which enables city drivers to shorten driving times by using real-time traffic information, leading to reduced travel time up to 20 percent based on market trial conducted by Nissan.
Through the elements set forth in PLAN 13, DFL has set a sales target of 680,000 vehicles for 2008.
Dongfeng Motor Co., Ltd. was established in 2003 as a result of a comprehensive, strategic partnership between Dongfeng Group and Nissan Motor Co., Ltd. DFL is the first joint venture in China to have a full line-up of passenger vehicles, LCVs and H&MCVs, and has grown faster than then the total market in China. Registered capital of the company is RMB16.7 billion (USD: 2.4 billion), the largest automotive joint venture investment in China, with Dongfeng and Nissan each holding a 50 percent stake.
Nissan Business in China
Since the establishment of DFL, Nissan’s sales volume including both passenger and light commercial vehicles showed a sharp rise from 94,000 units in 2003 to 458,000 units in 2007. Nissan also launched its luxury brand, Infiniti, in China in 2007.
In 2008, Nissan plans to sell 500,000 vehicles, including four new Nissan models and three new Infiniti models. And by 2012, Nissan expects to reach sales of 800,000 units annually.
Note: Amounts in dollars are translated for the convenience of the reader at the foreign exchange rate of RMB 1 per USD 0.145.