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May 28, 2008

CHINA: Nissan partner makes ambitious plans

Nissan's Chinese partner Dongfeng Motor has announced an ambitious 2008 to 2012 mid-term business plan focused on building a stronger market position and increased global competitiveness.

Nissan’s Chinese partner Dongfeng Motor has announced an ambitious 2008 to 2012 mid-term business plan focused on building a stronger market position and increased global competitiveness.

The new five-year plan, named Plan 13 (for one cubed), expands on the company’s previous business blueprint, Plan 23 (two cubed), under which it doubled sales volume between 2003 and 2007.

Plan 13 includes: further business expansion targeting sales of 1m vehicles and revenue of RMB100bn (US$14.5bn) by 2012; “first class in quality at all levels of product, sales & service and cost competitiveness”; and “creating one company through the formation of a single DFL corporate culture that combines the best of the Dongfeng Group and Nissan”.

DFL said its sales have grown rapidly in China, reaching 610,000 vehicles in 2007 and, based on this growth trend, it will target vehicle sales of more than 1m units and revenue of RMB100bn by 2012.

To do this, DFL will launch around 10 new passenger vehicles under the Nissan brand and about five new light commercial vehicles (LCVs) under both the Nissan and Dongfeng brands.

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 (DFAC) and Nissan (China) Investment (NCIC) will invest RMB1bn (US$145m) on installed capacity of about 120,000 vehicles a year.

DFL also 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 from 2007 by 2012.

The automaker will also strengthen overseas business to meet commercial vehicle demand in growing markets by doubling exports from 5% in 2007 to over 10% by 2012. Both the number of models and export markets 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.”

To enhance cost competitiveness, DFL will work towards increasing passenger vehicle localisation of  transmissions, engines and other parts from 70% in 2007 to 90% in 2012.

Dongfeng Nissan Technical Centre will address more engineering functions in addition to current testing and parts localisation.

And in support of a thoroughly trained dealer body, the Huadu training centre will provide product and sales and service education to dealerships focused on customer-oriented management.

On the environment front, the company aims to boost the number of passenger vehicle sold with more efficient continuously variable transmissions (CVTs) to 50% of sales by 2012 and also will explore alternative fuel trucks, such as those powered by liquid natural gas (LNG).

DFL will continue work on Star Wings, the new navigation system that will be available on the new Nissan Teana (a Maxima variant). This is a cooperative project between Nissan and the Beijing Transportation Information Centre (BTIC) which enables city drivers to shorten driving times by using real-time traffic information, leading to reduced travel time up to 20% based on market trials conducted by Nissan.

Dongfeng Motor was established in 2003 as a strategic partnership between Dongfeng Group and Nissan Motor.

The company said it was the first joint venture in China to have a full line-up of passenger cars, plus light, medium and heavy commercial vehicles, and has grown faster than the total market in China.

Registered capital of RMB16.7bn (US$2.4bn) is the largest automotive joint venture investment in China, with Dongfeng and Nissan each holding a 50% stake.

Since the establishment of DFL, Nissan’s sales of both passenger and light commercial vehicles rose sharply 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, the automaker plans to sell 500,000 vehicles, including four new Nissan models and three new Infinitis. By 2012, Nissan expects sales of 800,000 units annually.

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