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 • homeChairman's Statement
Dear Shareholders,
       On behalf of the Board of Directors, I hereby present the annual report of the Company for 2017 for your review.
       In 2017, the aggregate number of vehicles sold in China’s automobile market amounted to approximately 28,878,900 units, representing an increase of 3.0% as compared with the corresponding period last year. The overall automobile market showed slowing-down growth, intensified competition, consumption upgrade and divergent tendencies in the following aspects: the competition in the passenger vehicles market was increasingly fierce and continued to fragment, sedan recorded a decrease of 2.5%; due to the consumption upgrade, SUV achieved a year-on-year increase of 13.3% with a continuous growth momentum; luxury vehicles and mid-to-premium MPV maintained a rapid growth; commercial vehicles continued to grow in a rapid pace, with a further increase in market concentration. In 2017, the sales volume of commercial vehicles was approximately 4,160,600 units throughout the year, with a year-on-year increase of 14.0%. Heavy-duty trucks witnessed a record-high growth in sales volume of more than 1,000,000 units again after 2010, with a year-on-year increase of 52.4%; the sales volume of new energy vehicles recorded a steady growth. Due to the Double Points policy on new energy passenger vehicles, automobile enterprises have enhanced their product arrangements and sales. The sales volume of new energy vehicles amounted to 777,000 units for the year, representing an increase of 53.3% as compared with the corresponding period last year. The advance of “New Five ( 新 五 化 )” of automobiles was more apparent. The automotive industry is facing new opportunities and challenges.
       In 2017, the total sales of Dongfeng Motor Group for the year were approximately 3,284,200 vehicles, representing an increase of approximately 4.1% over the corresponding period of last year. The sales revenue of the Group was approximately RMB125,016 million, representing an increase of 2.0% as compared with the corresponding period of last year. Based on the proportionate consolidation method, the sales revenue of the Group for the whole year amounted to approximately RMB273,243 million, representing an increase of 11.3% as compared with the corresponding period last year. Among which, the sales revenue of passenger vehicles amounted to approximately RMB193,304 million, representing an increase of 2.1% as compared with the corresponding period last year; the sales revenue of commercial vehicles amounted to approximately RMB76,245 million, representing an increase of 40.1% as compared with the corresponding period last year. In 2017, profit attributable to shareholders was approximately RMB14,063 million, representing an increase of 5.4% as compared with the corresponding period last year. From the business units, commercial vehicles maintained double-digit growth and recorded a significant improvement in operating performance; new energy vehicles achieved strong sales growth while controlling the risks; overseas businesses seized opportunities for rapid development and made breakthroughs in exports of passenger vehicles under self-owned brands.
       The operation of Dongfeng Motor Group had the following characteristics in 2017:
       1.Maintaining high-quality operation. A total of 3,284,200 vehicles were sold during the year, representing a year-on-year increase of approximately 4.1%. More than 20 types of new passenger vehicles were introduced during the year. Our medium-to-high-end vehicle models gained a larger proportion of sales volume. The proportion of sales volume of our SUV models to the Group’s total sales volume of passenger vehicles increased by approximately 6.1 percentage points. The proportion of sales volume of heavy-duty trucks, in particular tractors, increased rapidly. Our revenue and profit per vehicle both increased. Due to adhering to the principle of delivery orientation, our total retail volume was higher than the wholesale volume during the year and the whole vehicles inventory level declined. Satisfactory results were achieved in our efforts to reduce costs and enhance efficiency over the whole value chain.
       2.Stepping up our efforts to enhance the core capability of self-owned brand passenger vehicles with a focus of “New Five” ( 新 五 化 ). Light-weighted, electrification, intellectualization and networked products were launched more quickly. A sharing platform was preliminarily set up. Active efforts have been made in the preparatory work for intelligent networked services and big data platforms. The Group has entered into a framework agreement for strategic cooperation with each of FAW and Chang’an to conduct strategic cooperation in the fields of cutting-edge generic technologies innovation, whole value chain operation, forming alliances when “going global” and emerging business models.
       3.New developments marked in self-owned brands, new energy and overseas business. A total of approximately 962,000 self-owned brand vehicles were sold during the year, representing a year-on-year increase of approximately 6.2%, and a total of approximately 441,200 commercial vehicles were sold during the year, representing a year-on-year increase of approximately 23.8%. The Double Points Management Measures and Synergistic Mechanism for Points Transfer were adopted by the Group. In active response to the “Belt & Road” Initiative, the Group exported a total of approximately 53,000 vehicles during the year, representing a year-on-year increase of approximately 68%.
       4.Promoting the sustainable and stable development of its joint venture business. Following the commencement of the 13th Five-year Plan Period, Dongfeng Motor Group devoted more efforts into the management of its joint venture business. Over the past year, as the communication between Dongfeng Motor Group and senior management of the joint venture partners entered into normalization, the strategic interactive capacity of Dongfeng Motor Group was obviously improved, its leadership in the strategic planning of joint venture business and its right to speak on the resource allocation further enhanced, the development orientation and strategy of various joint venture businesses expressly explicated. In particular, this strongly drived Dongfeng Nissan Passenger Vehicles to reach a new level of over 1,100,000 units in a steady way and Dongfeng Honda vehicles to maintain strong growth despite in its capacity limit, which made a great contribution to the operations of the Group. For some business lines of Dongfeng Peugeot Citroën Company in the adjustment period, we have reached a consensus in various aspects through our active communication with the joint venture partners, which created favorable conditions for returning to the track.
       As China’s economy development has shifted from rapid growth to high-quality development, China’s automotive industry has evolved into a new phase of quality competition. Being confronted with new challenges and opportunities, Dongfeng Motor Group will primarily focus on the following aspects: 1. strengthening product competitiveness, marketing strength and brand power and accelerating the launching of new vehicle models; 2. strengthening overall competitiveness of the Group by making breakthroughs in the self-owned brand business segment; On one hand, new leading advantages will be created for its commercial vehicles, on the other hand, the Group will make further efforts in pursuing the platform-based strategy, and enhancing the core capability of its self-owned brand passenger vehicles; 3. tapping further into the overseas market by actively responding to the “Belt & Road” Initiative; 4. accelerating the development and implementation of the new-energy automobiles commercialization project, advancing the industrialization projects of “power batteries, electric engines and electronic control systems” ( 三 電 ) for new-energy automobiles, strengthening Double Points management, and promoting the rapid development of the new energy automobile undertaking; 5. keeping abreast with the trend of “light weight, electrification, intellectualization, network and sharing” (新五化) while propelling innovation-driven development.
       In face of a complicated industry environment, Dongfeng Motor Group will further enhance the sense of mission and responsibility, continue to promote the development of each business segment, and strive to maximize the return to its shareholders.
Zhu Yanfeng
Chairman
27 March 2018