Strategic Alliances, Collaboration and Joint Ventures Case Study

Dongfeng–Volvo JV in China: Will it Pay Off?

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Abstract:
The coming together of Dongfeng, the Chinese automaker and AB Volvo, the Swedish brand, brought news for the world's fastest growing automobile market. For Dongfeng, it was a chance to expand its potential on a large scale in the commercial vehicle segment which constituted almost two-thirds of the Chinese automobile industry. Volvo also needed the venture to explore the potential of the Asian market, where manufacturing costs were lower. Moreover, Volvo's position was already turbulent in the stagnated markets of North America and Europe. However, speculation was also part of this Dongfeng-Volvo alliance with regard to brand positioning dilemmas. Volvo's target was the luxury segment and Dongfeng was focused on the mass market. Also, the Chinese logistic system was hardly conducive for Volvo's high value trucks. Would the venture lead to brand dilution for Volvo? Thus remained a debate.

Pedagogical Objectives:

This case study aims at achieving the following pedagogical objectives:
• To develop an insight into the Chinese automotive industry.
• To understand the significance of brand positioning in the automobile market.
• To analyse whether the Chinese automobile market was conducive for an international joint venture in the luxury car segment?.

Keywords :  Automobile, China, Inorganic expansion, Market share, Commercial vehicles, Passenger vehicles, Joint venture, Dongfeng, Asia, Brand positioning, Marketing strategy, Car market, Cost

Contents : 
The Chinese Auto Industry: Two-Third Occupied by the Commercial Vehicles
Joint Ventures Between International Automakers and Domestic Automakers
The AB Volvo Group
Dongfeng Motor Company: A JV Between Dongfeng and Nissan
Dongfeng Volvo JV: Probable Causes and Consequences
Brand Positioning of Global Automakers