Dongfeng Motor Corp tabs high-ranking official from Jilin province; FAW Group fills vacancy amid graft scandal

In a shuffling of positions for two of China's largest State-owned automakers, Dongfeng Motor Corp announced that Zhu Yanfeng, deputy secretary of the Communist Party in northeastern Jilin province, will be its new chairman.

Zhu replaces Xu Ping, who has been appointed the chairman of FAW Group Corp.

Zhu, 54, was the former general manager of FAW from 1999 to 2007, and has served as the Communist Party of China Jilin Provincial Committee's deputy secretary since 2012.

Xu, 58, chaired Dongfeng Motor Corp for nearly five years. His appointment to FAW chairman fills a two-month vacancy left by Xu Jianyi, who on March 15 was placed under investigation for corruption.

Xu Jianyi's arrest is the latest in a long line of scandals for FAW, which has seen a number of management members placed under investigation for various violations.

Both FAW and Dongfeng have a multitude of subsidiaries and joint ventures.

FAW is currently working with Volkswagen and Audi, Toyota and Mazda, while Dongfeng owns a significant share of PSA Peugeot Citroen and has cooperative deals with Renault, Nissan, Honda, Kia, Volvo and Yulon.

Zeng Zhiling, managing director of LMC Automotive Consulting (Shanghai) Co Ltd, said the two major carmakers have had preferential policies by the government to establish joint ventures.

Of the 3.08 million autos FAW sold last year, 2.92 million came from its joint ventures with Volkswagen, Toyota and Mazda. The total sales figure from 2014 represents a 6.2 percent growth from the previous year.

According to the annual report of the Hong Kong-listed Dongfeng Motor Group Co Ltd, the company sold 2.73 million units last year, a 6.5 percent jump from 2013.

Statistics indicated more than 2 million units came from its five largest joint ventures: Dongfeng Nissan, Dongfeng Peugeot, Dongfeng Citroen, Dongfeng Honda and Dongfeng Yueda Kia.

Last year, more than 7.57 million units of Chinese-branded passenger cars were sold last year, a growth of 4.1 percent from 2013.

"But large State-owned brands have been developing slowly, allowing private Chinese carmakers the chance to overtake them," Zeng said.

Steve Man, an auto analyst at Bloomberg Intelligence, said he is seeing significant strides by Chinese carmakers to close the gap in quality with their overseas rivals.

"Great Wall's SUV sales have beaten its overseas rivals like Honda and Hyundai. Geely is leveraging its acquisition of Volvo to upgrade its locally branded vehicles to challenge overseas rivals in China," Man said.

Rumors squashed

Before the new appointments by Dongfeng and FAW Group, the two SOEs halted trading on May 5 as a reaction to rumors that a merger between the two companies was imminent.

The Hong Kong-listed Dongfeng Motor Group Co Ltd denied the rumors on May 5 and resumed trading that afternoon. Dongfeng Automobile Co Ltd, Dongfeng Electronic Technology Co Ltd, FAW Car Co Ltd and Tianjin FAW Xiali Automobile Co Ltd, all of whom are publicly listed, all denied the merger rumors and resumed trading on May 7.

haoyan@chinadaily.com.cn

(China Daily 05/11/2015 page18)