On April 12, the joint stock company of Dongfeng Automobile Group (hereinafter referred to as "Dongfeng Automobile Group") announced that the company entered into an equity transfer agreement with PFN and Shenlong Automobile Co., Ltd. (hereinafter referred to as "Shenlong Automobile"). According to the equity transfer agreement, the company agreed to acquire, and PFN and Shenlong Automobile respectively agreed to transfer 25% and 50% of Dongfeng Peugeot Citroe ? n Automotive Finance Co., Ltd. Currently, Dongfeng Automobile Group, PFN and Shenlong Automobile hold 25%, 25% and 50% of Dongfeng Peugeot Citroe ? n Automotive Finance Co., Ltd. After the equity transfer is completed, Dongfeng Automobile Group will acquire 75% of the equity of Dongfeng Peugeot Citroe ? n Financial, and Dongfeng Peugeot Citroe ? n Financial will become a direct wholly-owned subsidiary of the company. Dongfeng Motor Group said it agreed to close the transaction in the second half of 2022, subject to approval from relevant antitrust authorities and banking and financial regulators.
According to the announcement, Dongfeng Peugeot Citroe ? n Financial is mainly engaged in providing automobile loans to dealers, providing automobile consumer credit and other related businesses to individuals and commercial customers. As of the date of the signing of the equity transfer agreement, Dongfeng Peugeot Citroe ? n Financial’s registered capital is RMB 1 billion, which has been fully funded by shareholders according to their respective shareholding ratios.
According to previous reports, Stellantis Group will adjust its business in China, and Shenlong Automobile will adopt the "two rooms and one hall" plan, in which "two rooms" refers to Dongfeng Peugeot will be led by the French side, and Dongfeng Citroen will be led by the Chinese side; "one hall" refers to the sharing of existing commodity planning, technology, quality, industrial production and other public areas. According to relevant reports, Stellantis Group and Dongfeng Automobile will negotiate the shareholding adjustment of Shenlong Automobile. The plan is that the foreign party will hold a 75% stake in Dongfeng Peugeot, and the Chinese party will hold a 75% stake in Dongfeng Citroen. The shareholding of Shenlong Automobile by both parties will remain unchanged at 50:50. However, as of press time, Shenlong’s plan of "two rooms and one living room" has not been announced, but Dongfeng Motor Group’s acquisition of Dongfeng Peugeot Citroen Financial Co., Ltd. cannot be ruled out as part of the plan.
According to the production and sales data released by Dongfeng Motor Group, the sales volume of Shenlong Automobile in March was 10,847 units, an increase of 44.51% compared with 7,506 units in the same period of 2021. The cumulative sales volume in the first quarter was 31,480 units, an increase of 79.49% compared with 17,539 units in the same period of 2021. According to the data of the Passenger Federation, the highest sales volume of Shenlong Automobile in March was Versailles C5X, with 4,700 units, followed by Peugeot 4008 and Peugeot 2008, with sales of 1,294 units and 1,264 units respectively, and other models sold less than 1,000 units. As far as the current situation is concerned, the sales source of Shenlong Automobile basically relies on Versailles C5X, which is the best-selling model of Shenlong Automobile, but the gap between products of the same level is quite a bit.
2022 is the 30th anniversary of the founding of Shenlong Automobile, and it is also a critical moment to determine its fate. Looking back at the history of Shenlong Automobile, there has been a well-known model like Fukang, which once sold 700,000 vehicles a year, making it an uncompromising first-line car brand. However, due to the aging of the product line and the untimely replacement, Shenlong Automobile fell by 15.2%, 36.85%, 32.89%, 55.17% and 55.74% respectively from 2016 to 2020. Sales have declined year-on-year for five consecutive years, and sales have halved for two consecutive years.
In October 2020, Shenlong Automobile released the "Yuan +" plan, starting the road of rejuvenation with the slogan of "more Chinese products, more accurate marketing, more reliable service, and more efficient operation". At present, initial results have been achieved, but there is still a long way to go from its goal. For the new year’s plan, Shenlong Automobile said that 170,000 vehicles will be reached in 2022, and 200,000 vehicles will be challenged. To achieve 200,000 vehicles, the profit will be stable in the future. We will not pursue 500,000 or 700,000 vehicles in the future, but stabilize at 300,000 or 400,000 vehicles. High-quality development, and keeping up with the products behind. From the perspective of the market outlook, the revival of Shenlong Automobile still depends on products, and according to the "Yuan +" plan, Shenlong Automobile will build and launch 14 new models within 5 years to achieve a comprehensive upgrade of the product matrix.
Shenlong Automobile insiders said that although Shenlong Automobile’s sales volume exceeded 100,000 units in 2021, it has not yet turned a profit. It can be said that Shenlong Automobile is still hovering on the line of life and death, at least 200,000 units must be reached to catch a breath. According to data, Shenlong Automobile has sold 31,480 units in the first quarter, and completed the sales target of 170,000 units by 18.5%. For Shenlong Automobile, it may be confident to complete the sales target of 170,000 units, but how to remain competitive in the market after that is still a question for Shenlong Automobile and shareholders of both parties to ponder.
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