Exclusive | DPCA "two rooms and one hall" joint venture strategy suspended Can it return to the main track?

The "two rooms and one hall" plan of DPCA, which was once hotly discussed in the industry, has been confirmed to be suspended.

"At present, we have confirmed the suspension of the company's joint venture strategic adjustment (that is, the "two rooms and one hall" plan that was previously rumored in the industry), mainly considering the extreme uncertainty this year and the economic situation and the competitive situation in the industry, both shareholders hope to do a good job in sales and word of mouth together, and then talk about (the plan) later. On May 7, relevant people of DPCA made an exclusive response to the Shell financial reporter.

When it comes to DPCA, many users will think of DPCA Fukang in the 1990s, which once became the "means of production" of Beijing's buddies, showing the style of Beijing in the streets and alleys. The DPCA brand, which has had many highlight moments, has also gone through twists and turns over the years. In 2020, it sold only 50,200 units. In 2021, the brand, which its general manager Chen Bin called "lying in the ICU", achieved a small goal of 100,000 vehicles driven by the controversial product Versailles.

DPCA was brilliant for a while, but now it faces major challenges such as product design and operation management

With the joint support of Dongfeng Motor and PSA Group, DPCA, headquartered in Wuhan, Hubei Province, has been rooted in the Chinese market for more than 20 years.

However, there are many views on the Internet that French cars seem to be less and less concerned about the Chinese market. DS's first pure electric vehicle with a price of 300,000 yuan adopts the knob-type backrest attitude adjustment setting of 20 years ago, and the group's senior management has rarely expressed its position in the overall strategy in China, which makes people think about whether the French brand will continue to operate in China.

If you turn the hand of time forward, French brands once attached great importance to the Chinese market. Whether it is The Fukang that is popular in the streets and alleys, or the later Peugeot 206, 307, Citroën Tianyi and other models, when they entered China, they were in line with international standards, and the styling design was quite fashionable.

The rapid development of the market, the cooperation between China and France, and a series of actions have also helped DPCA to reach a record peak of 704,800 vehicles in 2015. At the same time that DPCA is moving towards a highlight moment, product quality, technical iteration, business philosophy and even corruption problems are also exposed.

After 2015, the sales of DPCA began to decline. In 2020, it sold only 50,200 units. Zhang Xiang, an analyst in the automotive industry, believes that DPCA has had a good sales performance, on the one hand, with the help of the "big trend" of the overall rapid development of the Chinese auto market, on the other hand, China and France have introduced many excellent products. However, as the growth rate of China's auto market slows down and factors such as quality and service become new content that users pay attention to, DPCA has stagnated.

"The dividends of the SUV era have not been thoroughly eaten, the product design concept and local user habits cannot be unified, and the Chinese team and the French team jointly manage, resulting in reduced efficiency." Coupled with a series of corruption problems, quality management has also fluctuated, resulting in problems in the reputation of DPCA. Zhang Xiang said in an interview with Shell Financial Reporter.

"Some people say that the design of French cars is romantic and unique, but I think there are some of their own stubbornness here. The simplest thing is that the steering wheel is turned at the same time, and its central LOGO does not rotate with it, resulting in us not being sure where the steering wheel is in the "back to positive" state, and the operation is more awkward. Mr. Cao, the former owner of the Peugeot 307, told Shell Financial Reporter that he was once the "iron fan" of french cars, but now he has been upgraded.

Zhang Xiang believes that one of the biggest challenges facing DPCA is the product. As a Sino-French joint venture, peugeot and Citroen brands under Peugeot and Citroen are more dependent on the technical input of foreign parties in terms of products, and if the relationship between the two parties is not handled well, there may also be problems in product upgrading.

In addition to product issues, its internal management is also facing challenges. According to incomplete statistics, since 2015, Dongfeng Motor, the parent company of Dongfeng Motor, has investigated and punished a number of incumbent or departing executives in the construction of anti-corruption and clean government, and even in 2021, at least 4 former executives of DPCA have been investigated for suspected serious job violations.

And most of these executives quietly left when DPCA turned from prosperity to decline, leaving "a place of chicken feathers".

Regrouping enterprise sales rebound Reform ushered in a break?

In the many years since DPCA has been going downhill, the French side and the Chinese side are also trying to reverse the situation. But until the arrival of Chen Bin in the second half of 2020, DPCA has not stopped the decline. Chen Bin, who served as assistant to the president of Dongfeng Motor Group Co., Ltd. and executive deputy general manager of Dongfeng Dongfeng Motor Co., Ltd., has the most exciting achievement in the industry is to help Dongfeng Light Truck turn a profit.

After Chen Bin arrived, he did not shy away from the problems of DPCA at that time, he talked very frankly about the challenges faced by DPCA, and even said bluntly: DPCA has already lived in the "ICU" in 2020. In the face of problems, Chen Bin also led the team to introduce a large number of reform measures.

Zhang Xue (pseudonym), an internal employee of DPCA, introduced to Shell Financial Reporter that the change of the enterprise probably began from the 2020 DPCA Automobile Culture Festival, and the company began to take users as the center, focusing on products, marketing, services and operations. In order to focus on users, Chen Bin himself organizes a marketing day meeting from 8:30 to 9:00 every day, the core of which is to pay attention to a series of problems complained by users and change them.

In terms of products, Versailles, which is full of controversy but has a gratifying performance in sales in 2021, has become the pillar of the surge in sales of DPCA in the second half of the year. "Initially, the name versailles within the company was also hesitant, after all, in addition to the meaning of versailles, the name is a neutral word in Chinese social media." Zhang Xue said bluntly, "But the final result is good, even if there is some controversy, but the product has also received attention." ”

A Verne racing owner mentioned to the Shell financial reporter that in the past, French car companies were not very good in service, but now they are gradually trying to improve. "Buying this car does look at the 'reality' of its later maintenance, such as the free replacement of spare parts under the maintenance of regular channels, and the lifelong free rescue under certain conditions are more attractive to me and my wife." The Verme racing master said.

In this regard, auto analyst Zhang Xiang pointed out that at present, DPCA's products have good discounts, and a large number of discounts and guarantees are given in the after-sales service link. This strategy allows users to reduce maintenance costs after purchasing a car, which is relatively aggressive, but the effect of profit is more obvious. But Zhang Xiang also pointed out that such a move is risky and will make the brand tone slightly decline. Previously, Brilliance Auto had quickly "returned to blood" because of the price exchange, but the unsustainable operating state finally made the company collapse into the sand.

At present, DPCA is also "light and simple", its first factory, the second factory have changed hands, and the second factory has spread the "sold to Dongfeng Honda" statement. In this regard, DPCA officially said that the factory is not sold to any company, but by the government to collect storage. Li Lei (pseudonym), a relevant person of Dongfeng Motor Group, mentioned that the current overcapacity of the automobile industry is an indisputable fact, and the annual sales volume of the entire market is about 26 million vehicles, but last year, under the situation of contraction control, the production capacity still reached more than 40 million vehicles. "DPCA launched the F99 project, leaving behind the burden of three factories and turning it into a flexible chemical plant with higher efficiency. At present, the factory production capacity is 240,000 vehicles per year, plus the 160,000 vehicles in the Chengdu plant, which basically meets the sales plan of the enterprise in 2025. Li Lei said.

According to public information, the cumulative production capacity of the first and second plants of DPCA has reached 450,000 units.

"Two rooms and one hall" suspended The model relies on foreign capital, can Chinese and French shareholders twist into a rope?

As a joint venture brand, DPCA's current product launch is mainly limited by the French side's new car technology. How to control the rhythm of product updates and localization is also a difficult problem.

In 2021, Volkswagen CEO Diess, Tesla CEO Musk and other senior executives of overseas car companies have spoken out in the Chinese market and expressed their concern and positive attitude to the global media. The top executives of Stellantis Group, a foreign shareholder of DPCA, do not seem to attach too much importance to the Chinese market. Not only does the group's top management rarely mention the Chinese market in its strategy, but even in the 2025 strategic plan, it only includes China in the Asian market business.

Many commentators believe that the French side's attitude towards DPCA and even the Chinese market is not positive. With the liberalization of the equity ratio of the joint venture, there are many opinions in the market about where DPCA is going.

For the Attitude of the French Side, which is very concerned about the industry, Li Lei gave a more frank and positive response. "In the past, sales have declined, and there have been some differences between the two sides, but with the success of Versailles, both parent companies see more hope." Li Lei told Shell Financial Reporter.

Li Lei said that the French side has also made a lot of efforts in the Chinese market. Stellantis Group provides 8 million euros of brand building fees for Citroën and Peugeot brands every year, adding up to about 100 million yuan; French representative and vice chairman of DPCA Oliver has also mentioned the importance of the Chinese market to Stellantis in media dialogues many times; in 2021, in order to ensure supply, Stellantis Group allocates chip resources from all over the world to ensure chip supply for Versailles and other models at any cost.

The "two rooms and one hall" plan that the industry is concerned about has now been suspended. The core of the "two rooms and one hall" plan is that the large shareholding ratio between China and France remains unchanged, and the French or Chinese parties dominate the Citroën or Peugeot brands respectively. However, considering the extreme uncertainty this year and the economic situation, industry competition and other factors, the shareholders plan to "work together to twist into a rope" to make sales.

In terms of new products, DPCA will launch a total of 14 products based on the Yuan+ plan. Previously, the products launched by DPCA were not many, and the more well-known one was only a Car of Versailles. In addition to the DPCA pure electric models that have been released and have received 30,000 orders in the B-end market, the two major brands of Citroën and Peugeot will also launch Tianyi overhaul, Peugeot T93RR localization models, and P54 global models in 2022. In 2022, the company has set a goal of "guaranteeing 150,000 vehicles, challenging 170,000 vehicles, and dreaming of 200,000 vehicles" in terms of sales.

"At present, the two joint venture brands of Dongfeng Dragon Automobile are synchronizing their efforts, versailles has run out, which is worthy of recognition, but a single product is difficult to support alone, and the performance of other products depends on the core quality of the company's operation and model." Zhang Xiang commented, "In addition, in the new energy vehicle market, the B-end of Fukang alone is definitely not enough, and more products are needed to win the market."

For DPCA, 2022 is a big year for products, but in the context of Renault's departure, DS wrecking, the rise of independent brands, and new energy becoming a major trend, what kind of achievements these products can achieve in the market needs to be observed. But the indisputable fact is that the glory of DPCA has passed, and the new competition will be more intense.

Li Lei told Shell Financial Reporter that DPCA will no longer pursue the past of returning to the past with annual sales of 800,000 vehicles in a short period of time, but will be down-to-earth and become a "small and beautiful" automobile company. Nowadays, the new leadership team, new system and new products are bringing more vitality and opportunities to enterprises. The Sino-French joint venture giant ship that has re-set sail has achieved a "small victory" in the Versaille racing model, and whether it can return to the main track in the fiercely competitive automobile market and win a piece of the pie in the era of new energy vehicles still needs to be seen. Dongfeng Motor Group and Stellantis Group still have a long way to go.

Beijing News shell financial reporter Bai Haotian Editor Yue Caizhou Proofreader Zhao Lin