News that “Dongfeng Motor” will sell 51% shares of Zhengzhou Nissan to its controlling shareholder comes around at the end of its two-month suspension period.

 

Zhengzhou Nissan Encountering Asset Reorganization after Management Turnover

 

Established in March, 1993, Zhengzhou Nissan is a Sino-Japanese joint-venture auto manufacturing company, whose businesses are divided into three segments including commercial vehicles, passenger vehicles and alternative energy vehicles. Some analysts said its asset reorganization is related to its sales decline, profit loss and management turnover. Its former CEO Guo Zhenfu’s sudden leave in May, 2015 forced the marketing system reform to suspend. The following management turnover aggravated the worsening sales performance, which ended with 76,200 units’ total sales volume in 2015, decreasing 31% with 2014.

 

Solving Development Obstacles resulted by Multi-equity Structure

 

Guo Zhenfu’s leave is not the main reason for Zhengzhou Nissan’s bad performance. Some experts analyzed that, the combined factors of Chinese auto market’s slow growth in 2015 and the multi-equity structure all influence Zhengzhou Nissan’s sales volume. Currently, Dongfeng Automobile Co., Ltd, Dongfeng Motor Co., Ltd and Nissan Motor Co., Ltd hold respective 51%, 28.7% and 20.3% of Zhengzhou Nissan’s shares, creating a severe environment for every innovation and reform. After the reorganization, Dongfeng Motor Co. Ltd will hold 79.7% shares, and Zhengzhou Nissan will turn to be its holding subsidiary.

 

Competing in Alternative Energy Vehicle Market

Currently, Zhengzhou City is trying to achieve a transcending development of the auto industry to launch and import new models, by making alternative energy vehicles’ commercialization and auto manufacturing as priorities.

 

Zhengzhou City has an auto production of 131,000 units and output value of RMB 15.96b in Q1 this year, increasing 49.3% and 29.4% respectively. The exported vehicle has a production number of 1,700 units, with a delivery value of more than RMB 1b. Alternative energy vehicle has a total production number of 1,600 units. Yutong, Haima and Dongefeng Nissan all have a steady increase in terms of volume, mainly driven by alternative energy vehicles.

 

It’s learned that Dongfeng Motor has assigned Agreement on Technological Development for Dongfeng Alternative Energy Vehicle Project with Zhengzhou Nissan, the strategic focus of which may transfer to alternative energy vehicles. It remains to be seen whether Zhengzhou Nissan will come after Yutong, Haima, and Dongfeng Nissan to be the fourth biggest alternative energy vehicle producer in Zhengzhou City.