ETF Trends
ETF Trends

As I highlighted in two previous blog posts, automobile ownership in emerging market countries is expected to see major increases, as more people enter the middle class and see their disposable income rise. I previously profiled Great Wall Motors (GWM), the leading SUV brand in China. I want to profile another major auto company in China—Dongfeng Motor Group—that has the same long-term potential but has not experienced the same strong short-term gains as GWM. I’ll explore the cause of this short-term differential but also discuss why I believe Dongfeng is well positioned to benefit from the longer-term trends at work.

Dongfeng Motor Group Company

Dongfeng Motor Group is engaged primarily in the manufacture and sale of commercial vehicles, passenger vehicles, auto engines and parts, financing and other automotive-related businesses. Through its subsidiaries and joint ventures the group manufactured 39 series of passenger vehicles and 41 series of commercial vehicles, with annual production capacities of 2,200,000 units and 810,000 units, respectively1. The chart below lists the sales and after-sales services network of Dongfeng Motor Group’s 12 different brands.

Recent Sales and Profitability

Market Share: In the first half of 2013, Dongfeng Motor Group accounted for 11.2% of sales among the domestic automobile manufacturers in China.2

Dongfeng Motor Group Sales: In the first half of 2013 sales were approximately 1.2 million units, or 2.9% growth over the same period last year. This growth lagged the 12.3% growth of the broader industry, which sold 10.8 million vehicles.3

Dongfeng attributes its slower growth rate to the following factors:

General Business Slowdown: “The commercial vehicle market was affected by the prolonged economic downturn and Dongfeng was no exception as its commercial vehicles were mainly used for logistics.”4

Japan Political Tensions Flare Up and Hurt Japanese Co-Branded Sales: “Sales of Dongfeng Nissan and Dongfeng Honda fell below the sales targets as sales in Japanese-brand passenger vehicles significantly decreased as a whole since mid-September.”5

Showing Page 1 of 3