Shenlong Automobile Plant No. 2 was exposed or sold to Dongfeng Nissan

The production capacity of Shenlong Motors is significantly higher than the sales volume. The industry believes that the transfer is related to the sluggish sales;

Recently, it was reported that due to sluggish sales and idle production capacity, Shenlong Automobile Wuhan No. 2 Plant will be sold to Dongfeng Nissan instead of Dongfeng Honda, which had previously rumors. The plan has entered the actual operation stage, but there is still no official announcement.

As soon as the news came out, the rarely-voiced Shenlong Motor once again attracted everyone's attention. In recent years, the legal brands represented by Peugeot and Citroen have not performed well in China. After the efforts of Shenlong Motors, which are the two major brands, the sales volume is not obvious, and it is still in a difficult situation.

Shenlong No.2 Factory was repeatedly transferred to sell.

In fact, news about Shenlong Automobile Wuhan No. 2 Plant will be transferred again and again.

As early as last October, there was news that Shenlong Automobile Wuhan Plant No. 2 with the “PSA Group Global Model Factory” would be leased or transferred to its sister company Dongfeng Honda. It is reported that Shenlong Automobile Wuhan No. 2 Factory mainly produces Dongfeng Citroen, Dongfeng Peugeot C5, C6, 508, and the new 408, 308S, and other high-end models, as well as Dongfeng Aeolus independent high-end car Dongfeng A9.

The news was eventually denied by Shenlong Motors. The relevant person in charge of his public relations department said in an interview with the media, "As of now, Shenlong has not made any resolution on the sale or lease of Wuhan No. 2 Plant."

Afterwards, some media reports pointed out that Shenlong Wuhan No. 1 Plant introduced the production line of the model produced by the No. 2 Plant to upgrade, and the replaced 508, C6 and other models will be produced at the Chengdu Plant. The Second Plant has basically been abandoned.

The Beijing News reporter also learned that at the beginning of last year, due to the dismal sales, a large number of workers at the Shenlong Automobile were “idle”. Before the Spring Festival last year, Shenlong Motor Co., Ltd. decided to transfer nearly 2,000 workers to Dongfeng Honda and begin deployment after the Spring Festival.

Today, Shenlong Automobile Wuhan No. 2 Plant was once again exposed to be sold to Dongfeng Nissan. In response, the Beijing News reporter called the relevant person in charge of Shenlong Motor. As of the time of the press release, no contact has been made.

Insufficient sales leads to overcapacity of Shenlong

In the industry's view, it has been exposed to the sale of factories in succession, and it is not unrelated to the continued sluggish sales of Shenlong Motors.

In 2016, Shenlong Motor sold 598,000 units throughout the year, a year-on-year decline of 15.2%. In October 2017, Shenlong Motors lowered its annual sales target from 700,000 vehicles to 402,000 vehicles, but it has not yet completed. In 2017, Shenlong sold 378,000 vehicles, a decrease of 37% year-on-year.

According to the latest data, in May of this year, Shenlong Motors achieved sales of 26,167 units, a year-on-year increase of 9%. From January to May this year, the company sold 135,589 units of Shenlong Motors, an increase of 7.17% year-on-year.

Even so, the production capacity of Shenlong Motor is still significantly higher than the sales volume. There are signs of overcapacity. Currently, Shenlong Motors has a total of four vehicle manufacturers in China, including three in Wuhan, Hubei - Shenlong No. 1 Plant, Shenlong No. 2 Plant, and Shenlong No. 3 Plant, with production capacities of 300,000, 150,000, and 300,000 vehicles, respectively. The fourth plant that was put into production in September 2016 is located in Chengdu, with a production capacity of 240,000 units in the first phase. As such, the current total production capacity of Shenlong Motors' China plant is 990,000, which is far greater than its actual sales.

In recent years, in order to reverse this trend, Dongfeng Peugeot and Dongfeng Citroen have all stepped up efforts to launch new products, especially in the SUV market, 4008, 5008, Tianyi C5 AIRCROSS and other models have been listed, but the results are not obvious. In 2017, the sales volume of Dongfeng Peugeot was only 247,000 units, down 30% year-on-year. Dongfeng Citroen's sales volume was 131,000 units, down 47% year-on-year.

Insiders pointed out that in the SUV market, compared with many joint venture brands, the introduction of Dongfeng Peugeot, Dongfeng Citroen's products was significantly later. When the SUV market has become a Red Sea, it is not easy to highlight breakthroughs and achieve sales breakthroughs.

Shenlong multi-action effect to be tested

In fact, in response to the decline in sales volume, in addition to speeding up the pace of product introduction, Shenlong Motors has sought a breakthrough through a number of other initiatives.

In October 2017, Shenlong Motors established an action plan for the “three-step” mid-term career development plan for 2017-2023, and the three core objectives of “return to the track”, namely, 3% market share, that is, sales in 2020 More than 700,000 units; operating profit margin of more than 5%, and the quality of the industry's first three levels. Shenlong Motors stated that the previous system capacity building did not match the sales target of 700,000 units, as well as the lack of timely response to changes in the external market environment and internal systems, which were the main reasons for the continued decline in sales of Shenlong Motors. In the future, according to the “three-step” strategy, achieving 700,000 goals is not beyond reach.

This year, Shenlong Motor has adjusted the positioning of Dongfeng Peugeot. In April, Su Weibin, general manager of Shenlong Automobile Co., Ltd., stated at the media communication meeting that the price of Peugeot had indeed been somewhat higher. The Dongfeng Peugeot’s target was always the public brand. “But Peugeot's brand is too far away from the public in China. The brand positioning has indeed undergone some deviations, so it is still being adjusted. The Dongfeng Peugeot within the group is now benchmarking against Nissan.” This is also the first time that DPCA has proposed to bring Peugeot brands to Nissan since its establishment.

In April and September last year, Shenlong Motors also made two major adjustments to the business sector organizations to further strengthen regional marketing. In November last year, Shenlong Motors announced the implementation of the organizational reform plan for deepening reforms in the procurement field and the appointment and removal of personnel, and strengthened procurement strategies and service support procurement functions.