Dongfeng Commercial Vehicle Company (Dongfeng Commercial) held a groundbreaking ceremony for its new plant at Shiyan, Hubei Province, on May 23. The new plant is being built to expand the company’s limited production capacity.
Dongfeng Commercial’s new heavy-duty truck factory is designed to hold an annual production of 80,000 units, the first phase of which, designed for 40,000 units, will open for production in June 2011. The project will be funded by an estimated ¥1 billion ($147 million), with a total area of two square kilometers. Once the construction is complete, Dongfeng Commercial will posses the largest heavy-duty truck manufacturing base in China, producing some 200,000 units a year.
Dongfeng Commercial’s new factory will be manufacturing the company’s Dongfeng Kinland series, which was first introduced on May 18 of 2006, and is based on the truckmaker’s latest platform. The company has sold almost 150,000 units of the heavy-duty truck model over the past four year. Sales of the Kinland in the first four months this year climbed to 34,713 units, up over 300 percent year-on-year, with both March and April numbers surpassing 10,000 units. However, the truckmaker has struggled to meet orders due to a limited production capacity.
The booming heavy-duty truck market is showing signs of a cool down this month, with fewer orders received. Market analysts have raised concerns that with truckmaker’s expanding production capacity and slower market growth, company stocks could feel the heat very soon. In response, Huang Gang, general manager of Dongfeng Commercial, noted that the establishment of the new plant is not only to release production pressure, but is an essential step of the company’s long-term target of “No. 1 in China, Top 3 in the world.” Huang remained optimistic on the future domestic market and pointed out that Dongfeng Commercial will keep exploring the international market. In 2009, the Wuhan-based truckmaker exported 2,882 units of heavy-duty trucks.
When interviewed about Dongfeng’s joint venture negotiation with Volvo Trucks, Huang claimed that he was’t aware of current progress. He said Dongfeng and Volvo Group will be focusing on development of their current joint venture, Dongfeng-Nissan Diesel Motor (DND). DND is a 50:50 joint venture between Dongfeng and Volvo’s subsidiary, Nissan Diesel, producing heavy-duty trucks at 10,000 units a year.
When asked whether DND plans to make higher-end trucks under the Volvo brand, Zhou Wenjie, vice general manager of Dongfeng Motor, said anything is possible.