hk000kl3_shorthk000kl3 interim report 2007 30 aug 2007

HK000KL3_ShortHK000KL3

Interim report 2007Interim report 200730 Aug 200730 Aug 2007

HK000KL3_Short

I 、 PRC Auto Industry Overview in 1H2007 II 、 DFG Business Overview in 1H2007 III 、 DFG Financial Performance in 1H2007 IV 、 Outlook of DFG and PRC Auto Industry in 2007

I 、 PRC Auto Industry Overview in 1H2007 II 、 DFG Business Overview in 1H2007 III 、 DFG Financial Performance in 1H2007 IV 、 Outlook of DFG and PRC Auto Industry in 2007

HK000KL3_Short

I 、 PRC Auto Industry Overview in 1H2007 I 、 PRC Auto Industry Overview in 1H2007 1. Rapid Development of PRC Auto Industry

2. More Extensive Choices for Consumers with Constant Launch of New Models

3. CV Growth Higher than Industry Expectation, with Heavy Duty Truck Segment Recording Outstanding Increase

4. Overall Industry Profitability Improved , while Downward Price Pressure Still Exists

5. Auto Consumption Expands from 1st Tier Cities to 2nd Tier Cities, Which Rapidly Drives Auto Sales Growth

6. Rapidly Rising Self-owned Brands Which Targets at Low End Market

HK000KL3_Short- 4 -

1,2901,024

2,040

0500

1,0001,5002,0002,500

2006 1H2006 1H2007

Growth Rate:

25.9%

7,216

3,547

4,374

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2006 1H2006 1H2007

1. Rapid Growth of PRC Auto Industry 1. Rapid Growth of PRC Auto Industry

PRC Total Vehicle Sales VolumePRC Total Vehicle Sales Volume PRC Total PV Sales Volume1PRC Total PV Sales Volume1

000’ units 000’ units

PRC Total CV Sales VolumePRC Total CV Sales Volume

000’ units

China Association of Automobile Manufactures (CAAM)China Association of Automobile Manufactures (CAAM)Note1Note1 ：： According to CAAM’s segmentation, passenger vehicles include passenger car, MPV, SUVAccording to CAAM’s segmentation, passenger vehicles include passenger car, MPV, SUV and cross-over vehiclesand cross-over vehicles

Growth rate: 23.3%

5,176

3,0842,523

0

2,000

4,000

6,000

2006 1H2006 1H2007

Growth Rate:

22.2%

HK000KL3_Short- 5 -



2

3

11

1

8

7

1

2

14

2

0123456789

J an Feb Mar Apr May J un

Brand new f ace- l i f t

FebFeb MarMar AprApr MayMay

Below 100,000Below 100,000

100,000—200,000100,000—200,000

200,000- 300,000200,000- 300,000

Brand New PV Models in 1H2007Brand New PV Models in 1H2007

RIORIO千里千里马马

长安天语长安天语

JanJan JunJun

荣荣威威

S-MAXS-MAX

三厢威志三厢威志两厢两厢 F3F3奇瑞奇瑞 A1A1骊威骊威两厢天语两厢天语

长安杰勋长安杰勋卡罗拉卡罗拉

浪迪浪迪

明锐明锐海马海马 33

森雅森雅

瑞鹰瑞鹰

16, 49%

9, 27%

2, 6%

4, 12%2, 6%

bel ow10 10—15 15- - 20 20—30 above30

Model Launches and Price Range DistributionModel Launches and Price Range Distribution

RMB0,000RMB0,000

HK000KL3_Short- 6 -



Favorable Macro Economy Boosted Fast Growth of HDTFavorable Macro Economy Boosted Fast Growth of HDT

Impact from Implementation of Weight TollingImpact from Implementation of Weight Tolling

Upgrade of Highway Transportation Network and Demand Growth Upgrade of Highway Transportation Network and Demand Growth for Highway Freight for Highway Freight

Pre-consumption of HDT Due to Coming Implementation of Pre-consumption of HDT Due to Coming Implementation of National III Emission StandardNational III Emission Standard

HK000KL3_Short- 7 -



Improved Improved AAuto Industry Profitabilityuto Industry Profitability

Mid 2007 Mid 2006 Growth/rate

Number of Enterprises

288 249 39

Loss-making Enterprises

60 74 -14

Major Business Revenue( 100mn)

4863.76 3842.59 26.58%

Sales Profit Margin

6.21% 4.74% 1.47%

Total Profit (000mn)

302.06 182.19 65.79%

ROE 8.54% 6.06% 2.48%

StabilizingStabilizing A Auto Industry Profitabilityuto Industry Profitability

Source: CICC Research ReportSource: CICC Research Report

SourceSource ：： CAACCAAC

HK000KL3_Short- 8 -



Market Position of Self-owned Brands Market Position of Self-owned Brands Rapidly EnhancedRapidly Enhanced

22%20%

24% 25%29%

0%

5%

10%

15%

20%

25%

30%

35%

2003 2004 2005 2006 1H2007

Market Share

Sel f - ownedbrand, 29%

J apanese,26%

German, 20%

Amer i can,14%

Korean, 6%French, 4%

Sel f - owned brand J apanese German

Amer i can Korean French

Self-owned Brands Target at Low Self-owned Brands Target at Low Medium End MarketsMedium End Markets

Source ： CICC Auto Industry Report

HK000KL3_Short- 9 -



0

10

20

30

40

50

Bei j i ng Shanghai Guangzhou Shenzhou100 househol ds ownershi p rate

Ownership Rate in 1Ownership Rate in 1stst Tier Cities Tier Cities

0

10

20

30

40

50

100 househol ds ownershi p rate

Ownership Rate in 1st Tier CitiesOwnership Rate in 1st Tier Cities

Source:CICC Auto Industry Report

HK000KL3_Short

II 、 DFG Business Overview in 1H2007II 、 DFG Business Overview in 1H2007

1. Stable Growth of DFG Business in 1H2007

2. Segments Sales and Market Share of DFG

3. Stable Growth of DFG PV Business

4. Constant Launch of Competitive New Models

5. Steady Production Capacity Expansion Plan

6. Continuous Improvement of Local Content Ratio

HK000KL3_Short- 11 -

Steady Growth of PV SalesSteady Growth of PV SalesSteady Growth of Auto SalesSteady Growth of Auto Sales

Rapid Growth of CV BusinessRapid Growth of CV Business

1. Stable Growth of DFG Business in 1H20071. Stable Growth of DFG Business in 1H2007

DFG’s total sales reached 460,000 units in 1H2007, representing a YoY growth of 28.5%, higher than the industry average of 23.3%. Among which, PV sales grew by 28.3%, and CV sales grew by 28.8%.

751

358

460

0

100

200

300

400

500

600

700

800

2006 1H2006 1H2007

000’units

Growth rate:

28.5%

495

233

299

0

100

200

300

400

500

600

2006 1H2006 1H2007

Growth rate:

28.3%

000’units

256

125

161

0

50

100

150

200

250

300

2006 1H2006 1H2007

Growth rate:

28.8%

000’units


43. 80

2. 35 3. 336. 70 5. 00

10. 10

20. 5

1. 1 1. 7 3. 3 2. 35. 2

26

1. 7 2. 24. 4 3. 2

6. 4

0. 00

5. 00

10. 00

15. 00

20. 00

25. 00

30. 00

35. 00

40. 00

45. 00

50. 00

Basi c MPV SUV HDT MDT LCV

2006 1H2006 1H2007

■ 11.4% ■ 11.3% ■11.4%

■ 12.3% ■ 11.6% ■15.9% ■ 14% ■ 14.9% ■13.9%■ 21.8% ■ 21.6% ■17.2%

■ 24.8% ■ 23.7% ■26%

■ 10.6% ■ 10.5% ■11.3%

000’ units

2. Segments Sales and Market Share of DFG 2. Segments Sales and Market Share of DFG


0’unit0’unit

3. Stable Growth of DFG PV Business3. Stable Growth of DFG PV Business

DFG total sales reached 299,000 units in 1H2007, representing a YoY increase of 28.3%

99,231128,168

0

100,000

200,000

1H2006 1H2007

Dongfeng Nissan Company LtdDongfeng Nissan Company Ltd

Growth rate:

29.16%

100,173

101,729

98,000

100,000

102,000

1H2006 1H2007

Growth rate:

1.55%

Dongfeng Peugeot Citroen Co.,LtdDongfeng Peugeot Citroen Co.,LtdPSA Peugeot Citroën

20,006

53,822

0

50,000

100,000

1H2006 1H2007

Dongfeng Honda Automobile Dongfeng Honda Automobile Co.,LtdCo.,Ltd

Growth rate:

169.03%


4. Constant Launch of Competitive New Models4. Constant Launch of Competitive New Models

1H20071H2007

Model

3 brand-new models were launched in 1H3 brand-new models were launched in 1H

20062006

New Peugeot3

07

New Teana

Peugeot 206

Civic

C-Triomph

e

Sylphy

C2

Livina GenissN

ew m

odel

s la

unch

ed in

200

6

New PicassoNew Picasso

LivinaLivina

New CRVNew CRV

Newly launched models were well Newly launched models were well received by the marketreceived by the market

Dongfeng Peugeot Citroen (DPCA)

On March 24th, brand new Sara Picasso was launched to the market. By the end of July, aggregate sales reached approximately 4000 units

Dongfeng Motor Company (DFL)

On April 22nd, DFL’s brand new Livina made its debut. By the end of July, aggregate sales reached 19585 units

Dongfeng Honda Automobile Co.,Ltd (DHAC)

On April 18th ， Dongfeng Honda new CRV went to the market. It has been warmly received by the market ever since its debut. By the end of July, aggregate sales reached 15047 units.


5. Steady Production Capacity Expansion Plan5. Steady Production Capacity Expansion Plan

SSteady Production Capacity Expansion Planteady Production Capacity Expansion Plan

000’units000’units

320

625

345

720

413

820

0

100

200

300

400

500

600

700

800

900

CV PV

2006 1H2007 2008E

DFG Production Capacity and Utilization Rate

716 745

9451065

422.4598.2

756.3

48559%

80.30% 80.03%91%

0

200

400

600

800

1000

1200

2004 2005 2006 1H2007

0%

20%

40%

60%

80%

100%

Capaci ty Turn out Ut i l i zat i on

Steady Growth of Utilization Steady Growth of Utilization RRateate

000’units000’units


6. Continuous Improvement of Local Content Ratio6. Continuous Improvement of Local Content Ratio

Company

Models Localization Rate in 1H2007

Localization Rate by 2007 end

Future Improvement Plan

DPCA Fukang 89% 92% 94%

Elysee 88% 91% 95%

C2 79% 84% 85%

206 80% 84% 85%

Picasso 62% 64% 65%

C-Triomph 70% 82% 85%

307 81% 87% 89%

DFL Teana 66% 67%

Tiida/Tiida Hatchback

70% 75%

Sylphy 60% 66%

Livina Geniss 65% 71%

Livina 70% 70%

DHAC CIVIC 80% 80% 80%

CRV 66% 66% 70%

HK000KL3_Short

III. DFG Financial Performance in 1H2007III. DFG Financial Performance in 1H2007

1. Stable Growth of Major Business

2. Steady Growth of Gross Profit

3. Ever Enhanced Profitability and Operation Effectiveness


1. Stable Growth of Major Business1. Stable Growth of Major Business

Sales Revenue Structure and BreakdownSales Revenue Structure and BreakdownSales Revenue GrowthSales Revenue Growth

23, 282

28, 809

0. 00

5, 000. 00

10, 000. 00

15, 000. 00

20, 000. 00

25, 000. 00

30, 000. 00

35, 000. 00

1H2006 1H2007

1系列

23.7%

Million RMB Million RMB

1633920727

7637

6534

0

5000

10000

15000

20000

25000

30000

1H2006 1H2007PV CV

2328223282

2880928809

70.81% 70.18% 71.94%

27.54% 28.06% 26.51%

1.66% 1.76% 1.55%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 1H2006 1H2007

PV CV Others


2. Steady Growth of Gross Profit2. Steady Growth of Gross Profit

PV GP MarginPV GP MarginDDFG Gross Profit and GP MarginFG Gross Profit and GP Margin

CV GP MarginCV GP Margin

Million RMBMillion RMB

6,096

8,206

4,0844,991

14.6%

17.0% 17.5% 17.3%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2005 2006 1H2006 1H2007

0%

4%

8%

12%

16%

20%

Gross Profit GP Margin

15.8%18.9% 19.6% 18.4%

0.0%

10.0%

20.0%

2005 2006 1H2006 1H2007

11.3% 12.0% 13.0% 14.8%

0.0%

10.0%

20.0%

2005 2006 1H2006 1H2007




1601

2081

1114

1945

3.84% 4.31%4.80%

6.80%

0

500

1000

1500

2000

2500

2005 2006 1H2006 1H2007

0.00%

2.00%

4.00%

6.00%

8.00%

Net Profi t NP Margi n

13.12%14.56%

16.70%

24.50%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2005 2006 1H2006 1H2007

NP Margi n

Improved ROEImproved ROEImproved Net Profit & NP MarginImproved Net Profit & NP Margin

Improved Turnover RateImproved Turnover Rate

Million RMBMillion RMB

62

65

68

65

59

5456

5860

6264

6668

70

1H2005 2005 1H2006 2006年 1H2007

Turnover days

HK000KL3_Short

IV. Growth Prospect of PRC Auto Industry & DFG in 2007IV. Growth Prospect of PRC Auto Industry & DFG in 2007


Growth Prospect of PRC Auto IndustryGrowth Prospect of PRC Auto Industry

According to the forecast of our Group’s business plan, total PRC auto demand would reach 8,573,000 units in 2007 ( including 157,000 units of imported vehicles); annual PV demand would reach 6,321,000 units( if imported PV 150,000 units excluded, sales of domestically manufactured PV would be 6,171,000 units), representing a growth of 16.96% compared with total sales of 5,404,000 units in 2006( including 227,700 units of imported PVs; total CV sales is expected to reach 2,252,000 units ( including 7000 units imported CV ), with a YoY growth of 9.8%.

Annual sales target of our Group is between 900,000 units to 950,000 units with a sales breakdown of 70:30 between PV and CV.


Thanks

hk000kl3_shorthk000kl3 interim report 2007 30 aug 2007

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