Entering the market with inexpensive small cars, the Chinese firm created by Li Shufu is now shopping in Europe at the high end. A reverse course from that of its powerful state competitors, like Dongfeng, who are struggling to develop their own brands, analyzes Philippe Escande, economic columnist in the “World”.
Losses & profits. There was a time when car lovers swore by the length of the hood and the delicacy of the line. Insulting the gentleman adventurers of the 1960s, even Aston Martin, the official supplier of James Bond, must bow to this fatal trend. So much so that its survival today only depends on the release of a large 4 × 4 SUV. It is because it has obtained more than 1,800 orders for its future DBX model that the company will be able to obtain the loan that may save it from bankruptcy. The era is thus made. We are ashamed of flying, but not showing off in a paramilitary vehicle over 2 tonnes.
For Aston Martin, this turn, taken before him by other icons of the sports car, is supposed to stop the hemorrhage which saw its profits collapse in 2019, less than a year before its IPO. But it will probably not be enough. According to the Financial Times of Friday, January 10, a capital increase could occur quickly through the Chinese manufacturer Geely. This is not his first rescue from an old glory of European mechanics. He bought the Swedish Volvo in 2010, then Lotus, the British competitor of Aston Martin, in 2017, before recovering the small Smart from the German Daimler, in which he now holds 10% of the capital.
Site layoffs and closings
Founded by Li Shufu in 1986 to manufacture refrigerators, the firm has carved out a place in China, dominated by state-owned manufacturers producing cars for major European, Japanese and American brands. Entering the market with inexpensive small cars, it is now shopping in Europe at the top of the range. A reverse course from that of its powerful state competitors, who struggle to develop their own brands.
Dongfeng, the second largest manufacturer in the country, prospered mainly by manufacturing on behalf of Nissan, Honda or PSA. Prospering is a big word in the latter case, since following the collapse of sales of French in the Middle Kingdom, the company had to make thousands of layoffs and site closings. This, despite its entry, in 2014, in the capital of the Sochaux firm, in great difficulty. Today, on the occasion of the merger between Fiat Chrysler and PSA, the company will reduce its stake from 12% to less than 5%.