This is actually a "parallel version" of the internal horse racing mechanism, that is, two tracks are parallel, and the target KPIs of the two sides are different.
Author 丨 Meng Hua
Edited by 丨 Dahua
Produced 丨 Automan Media
Recently, rumors that DPLUS Motor Company will carry out internal structural adjustments have attracted industry attention.
Rumors say: Stellantis Group and Dongfeng Company reached a consensus, DPCA's shareholding ratio will not be adjusted, the internal division of labor will change, and the dominance of Dongfeng Peugeot and Dongfeng Citroen brands under DPCA will be held by the French and Chinese sides respectively.
This architectural design, which dongfeng related people call "two rooms and one living room", may lay the foundation for the operation pattern of Shenlong in the next 10 years.
1
Creative architecture
It is also rumored that Strantis will announce a new strategic plan in China on March 1, which includes increasing its stake in GAC FCA by 25% and increasing its stake to 75%.
This makes the outside world wonder whether the share ratio of the dragon will also be adjusted as a result. However, if the structure of "two rooms and one hall" is implemented, the share ratio should not change, otherwise if the "two rooms" are divided into sizes, the "one hall" will be out of balance.
The new structure, which has not yet been announced, is unique among Chinese automotive joint ventures. As a strategic concept, the problem it wants to solve reflects the perception of the current joint venture business between Shenlong and the Chinese and French shareholders behind it.
Before analyzing it in detail, we must admit that this is a rather creative design. But the difficulty lies in how the two sides grasp the scale of competition.
This depends both on the predetermination of the rules and on the wisdom displayed by both parties in the implementation process. Because no matter how detailed the rules are, they won't exhaust all the scenarios, nor will they give perfect answers before a problem occurs.
All joint venture structures are theoretical partnerships. But in reality, there is competition between the two sides.
This is unavoidable by any company, especially the collision and integration between two corporate cultures and two teams. Even if the "responsibilities and rights" seem to be clearly divided, in the gray area, there will still be differences, and there will be competition for resources and discourse power in different business directions.
Since it is all actually a competition, why does shenlong have to make a unique new architecture?
2
There is no way back
The urgent need for joint ventures to recover and re-emerge is the most important factor. The DPCA business has experienced a long decline, so much so that the Caucus has rated the market share of French brands as "other" (less than 1%).
In 2015, DPCA sold 702,000 units. Previously, in 2014, Shenlong opened a fourth factory in Chengdu, which was expected to be completed and put into operation in 2016. The move shows that PSA and Dongfeng are optimistic about the future of the DPCA business.
But everyone did not expect that this was already the peak of the dragon, and it fell into a 5-year recession after that.
In 2016, DPCA sold 600,200 units, down 14.50%; in 2017, it sold 377,500 units, down 37.10%,000 units; in 2018, it sold 253,400 units, down 32.87%,; in 2019, it sold 113,600 units, down 55.17%,; and in 2020, it sold 50,300 units, down 55.72%.
In 2021, the Dragon Jedi strikes back, and the Citroën C5X, which was launched in September 2021, has caused a good response in the market, with monthly sales of 5,000 vehicles. For the best-selling models on the market, this achievement is certainly not worth mentioning; but for the Shenlong, this is a long-lost recoil, but also a rebound growth.
What the Dragon lacks most is a signal to curb the decline, a big selling main model. Now there is none of that.
In 2021, the wholesale volume of DPCA exceeded 100,000 vehicles, rebounding by more than 100%. Among them, the Versailles C5 X, which has been on the market for only three months, has sold 12,100 vehicles in the whole year, making it the highest-selling product of Citroën and Peugeot.
Prior to this, there were constant rumors in the market, saying that the Chinese side withdrew, the French side withdrew, etc., and so on. However, after careful evaluation, both sides decided to continue to invest and revitalize the DPCA business.
For the Strands Group, GAC FCA and Changan Peugeot Citroen are small, and the DPCA business is already the last and largest strategic fortress in China.
PSA in Strantis has long since withdrawn from the U.S. market, and if it withdraws from China, it will hardly be called a multinational enterprise. Maintaining the existence of the largest single car market is now irrevocable.
If Strandes does think so, we can glimpse its bottom line, that is, it must continue to invest in the Shenlong joint venture, prompting it to resume performance growth as soon as possible, so as to stabilize the basic market in China.
3
Cognitive differences
The market frustration in recent years has made both China and France deliberately sum up the lessons. Zhang Zutong, deputy general manager of Dongfeng Company, which is in charge of the business of DPCA, once said: "In the past, PSA had any products, we introduced them, and did not really do product planning. In the future, real R&D and development itself is not a big problem, but more energy needs to be invested in product planning. ”
This remark actually summed up the two crux of the Dragon: one is that the model is not on the right road and is not suitable for the Chinese market, which is actually a fact; the other is that the marketing of the Dragon is poor. The former is the French issue, and the latter is the Chinese issue.
Member of the Standing Committee of the Party Committee and Deputy General Manager of Dongfeng Company
Zhang Zutong, chairman of Shenlong Company
In 2021, Oliver, who returned to China as COO of Landis China, said: "We attach great importance to the construction of a localized talent team, so many of the senior management team of the Strandis Group are localized talents in China. ”
This implies that the French side believes that "insufficient localization" is the reason for the decline of the business. In fact, not only personnel, but also disguised recognition of product ideas are not suitable for the Chinese market.
Member of the Global Executive Committee of stellantis Group and Chief Operating Officer of China
Olivier, Vice Chairman of DPCA
The idea given by the French side is to trust and empower Chinese executives and teams more, but it is still under the leadership of the French side.
The Chinese side believes that simply doing product localization, the Chinese side is still doing the work of the original "Chinese group". This line is not satisfactory, it needs to be changed to Chinese leadership, reorganize the product line, take big action on the marketing system (dealer network, marketing strategy and business planning), and greatly increase china's voice in the research and development line. China may be looking forward to the rapid launch of new energy product lines.
The Dongfeng Citroen "Tianyi Co-creation Edition", which was launched on December 31, 2021, reflects this idea of rapidly updating the product rhythm, incorporating users into the product feedback loop, improving market response speed, and accelerating new energy penetration.
In the past six months, dongfeng citroen's publicity wave has been higher than that of Dongfeng Peugeot, which is not only a reflection of China's initiative and active investment, but also an obvious signal that both sides are "focusing on a stall". "Two rooms and one hall" may have been implemented tacitly for a long time, but it did not fall on the black and white words.
Dongfeng believes that the advantages in electrification, intelligent networking and software can promote the improvement of product strength and better adapt to the current mainstream consumer trends in the market; but the French side may have reservations - it has been seen repeatedly before, and it is not easy for the French to change their operations and product ideas.
Both sides still face the reality of not being able to convince the other.
Each leading a brand is the best solution to resolve strategic differences.
4
Atypical collaboration
However, this is an "atypical" model of cooperation.
The two sides dominate each other, but in the integration of the two brands, they are still cooperative, and they are not completely separated, but only their independent decision-making power. This raises a new question about how to resolve internal competitive relationships. In fact, in the middle of many joint ventures, there are similar problems.
The same foreign side, different Chinese partners, is basically a competitive relationship. Even if there is cooperation, it is symbolic.
The same Chinese side, different foreign partners, is a typical competitive relationship. Although the brands are independent, the Chinese group level must deal with a series of resource allocation issues.
The current situation of Shenlong needs to be based on cooperation and avoid internal competition. This is actually a "parallel version" of the internal horse racing mechanism, that is, two tracks are parallel, and both sides are "assisting" on each other's track at the same time, and the target KPIs of the two sides are different.
Ideally, the only content of the competition would be the performance figures themselves, but the operational level would certainly involve more complex relationships. When necessary, a transcendent coordinator is needed to deal with any deviation from the main idea. To put it bluntly, an arbitrator needs to be set up regardless of specific matters, but with the authorization of the shareholders of both parties.
However, there is a high degree of consensus between the two sides on the issue of clearing redundant capacity. The DPCA No.1 factory will be repossessed by the Wuhan Municipal Government in 2020 and replaced by a re-auction of commercial land; the DPCA No.2 factory is likely to be sold to Dongfeng Honda (official news has not yet been released); and the shenlong no. 3 factory (Wuhan) and the fourth factory (Chengdu) production capacity bases will be retained.
Now is a good opportunity to seize the upward momentum, and the momentum can not be released. Although the new strategy has not yet been released, the spirit of the dragon has already risen.
On January 28, DPCA couldn't wait to release its January car sales. As of the date of release, DPCA's sales volume exceeded 13,000 units, and sales in January are expected to increase by more than 85% year-on-year. This is also the first time after a gap of four years that DPCA has sold more than 13,000 units.
Those who want the same thing from top to bottom win, and those who are in the same boat prosper. Since China and France have decided that Shenlong must continue to do and must do a good job, the new cooperation framework is conducive to both sides to get rid of the historical burden, take out strategic resources, and take advantage of the momentum to make the rebound into a reversal of the rise, there is still great hope.
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