Dongfeng expressed surprise at Stellandis’ remarks on asset-light operation of Shenlong Automobile

Bloomberg recently reported that a representative of Dongfeng Motor Group was “very surprised” by the remarks made by Tang Weishi, CEO of Stelandis Group, on the implementation of the “asset-light” strategy for Shenlong Motors recently. Dongfeng Motor Group has never been notified before, a company representative told Bloomberg.

Regarding the cooperation between the two parties, the representative of Dongfeng Motor Group introduced: “We have been discussing optimization plans for the next development of Shenlong Motors”. According to him, when summarizing the performance of Shenlong Motors in 2021, Tang Weishi also gave high praise, believing that the development of Shenlong Motors exceeded expectations, and emphasized that Dongfeng Motor “has made great efforts and contributions to the continuous growth in the past 23 months”.

At the Paris Auto Show not long ago, Tang Weishi told the media that he would adopt an asset-light strategy for the Chinese business: “As the asset-light strategy continues to advance in China, there is no need for us to build a factory in China.” Tang added that the company can import cars to the Chinese market through European and American factories.

Tang Weishi’s remarks immediately reminded people of Stelandis’ unilateral decision to withdraw from the GAC-Fiat Chrysler joint venture at the beginning of the year. Before that, Tang Weishi also released the information of “asset-light operation” to the outside world.

Since the strategic adjustment of Dongfeng Motor and Stelandis around Shenlong Motors in 2020, Dongfeng has indeed shown enough sincerity in cooperation. In order to open up the new products of Peugeot Citroen in the Chinese market as soon as possible, Dongfeng Motor arranged Chen Bin, assistant to the chairman, to be responsible for the specific business of Shenlong Motors, and the deputy general manager of the group to serve as the chairman of Shenlong Motors.

During the cooperation, Stelandis proposed that the Chinese side should focus on the Citroen brand and the foreign side’s complex Peugeot brand. The Chinese side had no objection to the “two rooms and one hall” approach. Thanks to the efforts of the Chinese side, Citroën relied on the Versailles C5 X to attract attention in the market, which also forced the French side to propose that the Chinese side intervene in the management of the Peugeot brand. Tang Weishi also praised and raised expectations for the development of Shenlong Motors at the shareholders’ meeting.

Different from the shock of Dongfeng Motor in China, many Chinese and foreign media who have been following Stelandis’ reports for a long time believe that Tang Weishi’s comments on “asset-light” operation in the Chinese market are his consistent business proposition.

On March 1, 2022, Stelandis Group released the “Brave Forward 2030” strategy to plan its business for the next ten years. The strategy clearly stated in a plan that only mentioned the Chinese market, “The Stelandis family plans to adopt an asset-light business model in China to reduce fixed costs and geopolitical risks.”

May 2022 is the 30th anniversary of the establishment of Shenlong Motors. Compared with the importance attached to the 30th anniversary celebration of Shenlong Motors by Chinese partners such as Dongfeng Motor, the foreign side has not made any comments on this. At that time, some people expressed puzzlement about the behavior of Stellandis Group, especially Tang Wei had many business exchanges with Dongfeng during the period of Renault and Peugeot Citroen, and his performance should not be so “cold”.

As of September 2022, Shenlong Motors has sold 90,424 vehicles, a year-on-year increase of 46.1%. Compared with the rapid improvement of the performance of Shenlong Motors, Stelandis’ investment in the two brands of Peugeot and Citroen is far behind that of the Chinese side. Especially in the face of the electric vehicle plan for the next ten years, Stellandis has made it clear that Europe will be 100% electrified and the United States will be 50% electrified.