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Volvo may take control of 45% of stock in Dongfeng Commercial Vehicle

According to a report appearing the China Securities Journal,the Shanghai United Assets and Equity Exchange announced that Dongfeng Motor Corporation had yielded its 45 percent share in Dongfeng Commercial Vehicle for 5.51 billion RMB ($893.96m). In line with earlier agreements, Volvo Group should have priority on the stock. Later during the day the transfer period for the stock was displayed as completed, which has led many to believe that there is a good chance will complete purchase of the stock by the end of the month. What this will mean for the future internal structure of Dongfeng Commercial Vehicle is a hot topic of interest in the industry.

Dongfeng Commercial Vehicle was officially established in January 2013 with registered capital of 9.2 billion RMB ($1.49b). As a major independent domestic manufacturer, Dongfeng possessed 100 percent of the share in the company. According to the company introduction, Dongfeng Commercial Vehicle currently employs 28,000 staff.

Despite the fact that the company has only been in operation under operation under the Dongfeng Commercial Vehicle name for just a year and a half, it still possesses a long history. It traces its beginnings to the establishment of Dongfeng’s second automobile manufacturing factory in 1969, which later was charged with manufacturing its medium and heavy vehicles. Dongfeng Commercial Vehicle has inherited its parent company’s tradition of manufacturing commercial vehicles.

Dongfeng Commercial Vehicle’s headquarters are located in Shiyan, Hubei. It currently possesses six specialized factories and ten subsidiary companies spanning Suizhou, Xiangyang, Shenzhen and Xinjiang. Its products cover the medium and heavy truck, bus, engine, driving cabin, axle and transmission fields. Its truck production and sales capacity has doubled over the past few years. It has led the industry for the last two years. The company was also responsible for creating the Tianlong and Tianjin truck platforms.

According to its most recent performance report, Dongfeng Commercial Vehicle sold a total of 81,500 heavy trucks over the first half of this year. Its Guosi line holds a 28 percent share in the Chinese heavy truck market. The company seems on the road to easily completing its 160,000 unit sales target for the year. The company’s revenue for the whole of last year was 19.1 billion RMB ($3.09b) and it generated a net profit of 340 million RMB ($55.16m). The figures for the first half of this year alone have drastically exceeded those numbers, with first half revenue and net profit amounts totaling 19.6 billion RMB ($3.18b) and 910 million RMB ($147.64m) respectively.

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