Dawn of a new era in China

The trend among major automotive and commercial vehicle manufacturers is to create a global alliance where product, brand and pricing strategies are tailored to each market. The joint venture between the Volvo Group and Dongfeng is a milestone, opening doors for both companies.
The joint venture between the Volvo Group and Dongfeng is a milestone, opening doors for both companies.

The joint venture between the Volvo Group and Dongfeng is a milestone, opening doors for both companies.

China is the world´s largest truck market. Three of the five main players at the Chinese truck market are partly owned by Daimler, the Volvo Group and Wolkswagen through various joint-venture structures. The consolidation in the Chinese automotive industry is likely to continue, according to research by Business Intelligence. In addition, Chinese manufacturers are moving towards more advanced trucks and more attention services.

”Traditionally, the main purchase criterion has been the price. However, we can see growing demand in China to provide quality products and sophisticated services in order to ensure uptime and reliability. The pressure of efficiency and the reduction of logistics costs are increasing as China transforms from a low-cost production centre of the world to provide higher quality products and services,” says Gary Huang, President Dongfeng Commercial Vehicles.

With Dongfeng Commercial Vehicles (DFCV), the Volvo Group is achieving a major foothold in the world´s largest truck market and will benefit from co-operation in various areas such as transmissions and engines. DFCV reported a pro-forma operating income of approximately SEK 1 billion in 2013 and it goes without saying tha positive operating results from DFCV will benefit the Volvo Group. DFCV, in turn, will gain access to selected Volvo Group technology and aftermarket expertise and will benefit from the Group´s experience in exporting to markets around the globe.

”The Chinese market is huge, very competitive but steady. And we need to be here to be truly global. DFCV has a fairly small aftermarket and export business, these are areas where we can bring in our key competence to support, says Claes Svedberg, Senior Vice President, China JV.

He is heading the China JV office which is responsible for all contacts between the Volvo Group and Dongfeng. This includes preparing DFCV board meetings, handling negotiations and commercial issues, sourcing the right competences for agreed line functions and synergy projects and acting as the interface between the two companies, securing that decisions are anchored at both ends.

The number one priority for Dongfeng is to strengthen and consolidate the position as a leading truck manufacturer in the Chinese market. Expanding the business in selected export markets and starting to build a global brand is also part of the ambition.

”We believe the Volvo Group can be a great support in many of these areas when we go forward,” says Gary Huang.