Dongfeng Motor Welcomes Auto Revitalizing Policy

To welcome the Chinese government's policy to subsidize rural customers for their purchase of low-end vehicles, Dongfeng Motor Corporation (DFM) is brewing expanding sales network in the second- and third-tier markets.

Previously, the State Council promulgated a revitalizing plan for the country's automobile industry. From March 1 to December 31, 2009, the Chinese government will appropriate CNY 5 billion for rural residents to exchange used tricars and low-speed trucks for light-duty trucks, and purchase below-1.3L minivans.

As one of the largest light commercial car manufacturers, DFM set up six special teams for surveys into local markets of Zhengzhou, Chengdu, Hangzhou, Jinan, and Kunming.

At DFM's proseminar discussing the revitalizing plan with dealers, the company's general manager Zhu Fushou said that the policy provided a good opportunity for DFM to boost light-duty truck sales.

In recent years, the company developed a series of light commercial cars that specially serve the rural market, including methane service cars, mobile sales trailers, vehicles for fresh fish and livestock transportation, pesticide spraying vehicles, and dumpers.

In 2008, DFM's sales exceeded 170,000 vehicles, including 119,800 light-duty trucks, which rose 12.56% from a year earlier. However, in January 2009, the traditional slack season, sales of its light vehicles dived 52.14%. The country's rural promotion of low-end vehicles will definitely bolster up DFM under the circumstance.

Other minivan producers also take reactions to the revitalizing plan, such as SAIC-GM-Wuling Automobile Co., Ltd. (SGMW), Chang'an Automobile Group, Harbin HF Automobile Industry Group Co., Ltd., and Jiangxi Changhe Auto Co., Ltd.

Harbin HF has widened and lengthened its minivans to meet the rural demand for transporting passengers and cargos. Meanwhile, the company optimized the dependability, carrying capacity, and energy-saving function of affiliated vehicles.

Jiangxi Changhe's new-generation minivan "Furuida" (in Chinese) and MPV Landy are all specially designed for the rural market.

Great Wall Motor Co., Ltd., an automaker based in the northern province of Hebei and focusing mainly on the production of pickup trucks and SUVs, believes its pick-up trucks will win the favor of rural drivers. Besides, Great Wall plans to launch a small-displacement sedan model customized for the second- and third-tier markets in 2009.

In a short term, Chinese proprietary brands will be more competitive in the rural market, while joint ventures need to change their product orientation, and develop more car models that cater to the rural demand.

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