hongkong journalists visiting
TRANSCRIPT
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CARE FOR EVERY CONSUMER, CARE FOR EVERY VEHICLE
DONGFENG MOTOR GROUP CO.,LTD
Nov. 22, 2006
Wuhan
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Table of Contents
Brief Overview of DFG
Brief Overview of DPCA
Brief Overview of DHAC
Current Operation Situation of DFG
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Group Structure
Dongfeng Motor Group
the Company
Subsidiaries Sino-foreign JVsOther companies in which
the Company has direct
equity interests
Dongfeng(Shiyan)
Special Purpose
Commercial Vehicle Co.,
China Dongfeng Motor
Industry Import&Export
Co., Ltd
Dongfeng Motor
Tender Info. Co., Ltd
Dongfeng Motor Co., Dongfeng HondaEngine
Dongfeng HondaDongfeng Honda
Auto Parts
Dongfeng Nissan
Diesel
Dongfeng Motor
Finance Co., Ltd
Dongfeng SUVCo., Ltd
Dongfeng Electrical
Motor Joint Stock
Dongfeng Peugeot
Citroen Co., Ltd
Honda Auto
(China) Co., Ltd
50% 50%
50%
44%
Dongfeng Motor Corporation
Public Shareholders
66.68%
33.32%
96%
95%
35.2%
50%
50%
20%
10%
40%
36.44%
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Production
Capacity
Unit: 0,000
Product
Line
ajor JVs Foreign
Partner
Dongfeng Peugeot
Citroen
PV
22
Dongfeng Honda
Automobile
PV 12
Dongfeng Honda
Engine
Engine
32
Dongfeng Motor Co.
Ltd
CV
PV
32
28.5
(1)
Nissan Diesel inclu ded
Brief Overview of DFG
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Xinjiang Auto
Liuzhou Auto
Shanghai
Hangzhou
Dongfeng Honda Auto
Parts
Shiyan BaseXiangfan Base
Wuhan Base
Guangzhou Base
Layout of Major Production Facility
Four Major Production FacilitiesShiyan Base:CV, Auto Parts , Auto
Manufacturing Equipments
Wuhan Base:Headquarter, PV
Xiangfan Base:LCV, Engines, PV
Guangzhou Base:PV, Engines, Auto Parts
and Components
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Brief Overview of DPCA
DPCA was first established on May 18th, 1992. Construction established in
two major stages based on an overall planning
First stage investment: RMB13.1bl. Annual production capacity of 150,000
units sedans and 200,000 units engines was formed in the stage
Investment budget for second stage construction is RMB 5bl, forming
annual capacity of 300,000 sedans and 400,000 units of engines
In January 2004, second stage construction for 300,000 units production
capacity expansion project broke ground.
On Oct. 27, 2006, construction for DPCA Second Plant started.
Company staff number: 9,000. Company structure: 9 departments, 2 plants,
2 Brand Commercial Departments.Technical engineers: 700 with an
average age of 35. 83.5% are college graduates.
Dual-brand strate
Course of Development
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Brief Overview of DPCA
Dual brands and a broad product line
Advanced technology
Strong R&D capability
Fine product quality
Leading-edge technology and safety
Platform-sharing strategy
1
Products technology keep pace with PSA level. Joint development of
products which are more adaptable to local market
2
Wider coverage of product lineN platform, No.2 platform, No.1 platform
3
Designed shared auto parts rate exceeding 60% - largely reducedmanufacturing cost
Company advantages
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Brief Overview of DPCA
2005 production:141,661
2005 Sales: 140,399
YoY growth: 60.92% and 57.52%
Operation Performance
114040
165453
141661
206762
0
50000
100000
150000
200000
250000
20051-10 20061-10 2005 2006
83670
32984
96233
64342
100011
40388
125000
83015
0
50000
100000
150000
200000
250000
20051-10 20061-10 2005 2006
DCAD DPAD
3.79% 4.39% 4.83% 4.95%
0
2
4
6
8
2004 2005 20061-9 2006
Operation situation from
95-2002
Operation situation from January October 2006
Sales from JanuaryOctober 2006 Market share
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Brief Overview of Dongfeng Honda Automobile
Co., Ltd
Time of EstablishmentJuly 16th, 2003
Equity Stake
DFM :HM :HMCI 50%:40%:10%)
Registered Capital200 mn USD
Production Capacity
120,000 units/year
Current Models
CR- V CIVIC
Staff number2526 personsby the end of September 2006
Time of Production
February 2004
Land Area
690,478
Corporate Culture
Continuously expand business scale and strive to achieve business target
Strive to improve customer satisfaction
Further improve corporate governance and closely cooperate for mutual
Course ofDevelopment
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Brief Overview of Dongfeng Honda Automobile
Co., Ltd
1st stage construction
2nd stage costruction +
CR-V: launched in May 2004, two time winner of CCTV Annual SUV
Taking leading position in PRC high-end SUV market ever since its launch
Civic: Launched in April 2006, the first sedan introduced by DHAC. Well
acclaimed by the market for its superb power and fuel efficiency.
CRV
CRV CIVIC
Products Briefing
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Brief Overview of Dongfeng Honda Automobile
Co., Ltd
11,931
25,645
51,887
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
55000
60000
2004 2005 2006 1 10
Operation performance
Production volume Sales revenuer
47071
10 ,47 2
26 ,24 4
5,000
20 ,00 0
35 ,00 0
50 ,00 0
2004 2005 061 10
Sales volume 649 ,949494 ,999
203 ,212
0
100 ,000
200 ,000
300 ,000
400 ,000
500 ,000
600 ,000
700 ,000
2 4 2 5 2 61 1
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Current operation for DFG
Aggregate sales: 595,000 units
PV: 385,000 units
YoYgrowth34.78%
High than industry average:31.68%
Several newly launched models, including new
Dongfeng Nissan Teana, Dongfeng Peugeot 206,
Dongfeng Citroen C-Triomphe and DongfengHonda Civic were well received by the market
and the recently launched Nissan Sylphy also
became a new growth driver for the Group.
In IH2006 sales volume broke through 100,000
units, recording a YoY increase of 38% and a
profit of RMB190 ml, operational level
remarkably improved
Sales revenue YoY growth 9.8%
Net profit YoY growth 68.75%
Gross profit YoY growth 47.65%
ROE YoY growth 7.2%
Remarkable market performancePV growth higher than industry average
in first 10 months
Improved financial performance 1-6
2006
Turning Around of DPCA, with
Remarkably Improved Operation
Major performance in first 19months
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384782
285486
0
50 ,00 0
10 0,000
15 0,000
20 0,000
25 0,000
30 0,000
35 0,000
40 0,000
45 0,000
2005,1-10 2006,1-10
Sales of PV- Dongfeng Honda Automobile
Sales of PV- Dongfeng Peugeot Citron
Sales of PV Dongfeng Motor Co. Ltd Total sales of PV - Dongfeng Motor Group
20,839
0
15,000
30,000
2005,1-10 2006,1-10
Source: Forcast of China Association of Automobile Manufactures (CAAM)
Each JV strategically launched competitive new models directed at each sub-segment,
which fastly pushed forward the Groups PV industry.
Well Positioned PV usiness Entered a Fast
Development Stage
147,993
0
50,000
100,000
150,000
2005,1-10 2006,1-10
Unit:,000
Unit:,000
116,654
160,575
0
100,000
200,000
2005,1-10 2006,1-10
Unit: ,000
PSAPeugeot Citron
,ooo units
Industry YoY growth rate34.75
47,071
177,136
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Steady Revenue Grow th
Sales Revenue
23,282
21,192
20,000
20,500
21,000
21,500
22,000
22,500
23,000
23,500
1H 2005 1H 2006
RMB million
Composition of Revenue
35
28
61
70
4
2
0
10
20
30
40
50
60
70
80
90
100
1H 2005 1H 2006
C V P V O thers
Rapid sales growth as well as a steady pricing policy guaranteed a continuous and
steady growth of the Groups sales revenue
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Cont inuous Grow th of Gross Prof i t
2,766
3,330
4,084
13.1
16.2
17.5
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2005 1H 2005 2H 2006 1H
0
4
8
12
16
20
G ross profit G ross profit m argin
DFGs Overall Gross Profit and Gross Profit Margin
14.0
10.3
13.0
0.0
10.0
20.0
2005 1H 2005 2H 2006 1H
12 .9
18 .2 19 .6
0.0
10 .0
20 .0
2005 1H 2005 2H 2006 1H
CV Gross Profit Margin
PV Gross Profit Margin
RMB million
Significant growth of the Groups PV gross profit and gross profit margin guarantees the
steady increase of the Groups gross profit margin
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Robus t Prof i t Grow th
660
940
1,11 4
0
300
600
900
1,20 0
1,50 0
N et Profit
DFGs Total Net ProfitSales Growth
RMB Million
Fast growth of PV sales volume and steady pricing policy guaranteed a continuously
steady growth of the Groups sales revenue
164
187
233
141 103
125
0
50
100
150
200
250
300
350
2005 1H 2005 2H 2006 1H
PV C V
000 units
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Cont inuous Improvement of Operat ional
Ef f ic iency
16.72
15.18
15.40
14.00
14.50
15.00
15.50
16.00
16.50
17.00
2 0 0 5 1 H 2 00 5 2 H 2 0 0 6 1 H
Improvement of operation efficiency led to steady growth of the Groups ROA and ROE
Net Profit Margin Return on Equity
4.80
3.10
4.60
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2005 1H 2005 2H 2006 1H
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Prospect of PRC Au to Indus try in 2H 2006
At the beginning of 2006, estimated annual sales growth of Chinas automobile industry by CAAM was 13% ,
000 units
Source: Forcast of China Association of Automobile Manufactures (CAAM)
6 5
5 758
5 2
5 4
5 6
5 8
6
6 2
6 4
6 6
2 5A 2 6 E
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2. Outlook of DFG
Specific Measures
000 units
Passenger Vehicles
In the 2H, Dongfeng Nissan Sylphy,
Geniss and Dongfeng Citroen T21
successively launched to the market.
Further improve localization rateand reduce cost through
advancement of technology,
management and central
procurement, so as to improve
competitive edge of our products in
the market.
Commercial Vehicles
Strengthen marketing of newly
launched products
Safeguard competitiveness of old
products
Sales Planning
230
200
70
250
0
50
100
150
200
250
300
D FL-PV D PC A D H A C C V
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