With the delisting of 25% of the equity of Dongfeng Yueda Kia listed and transferred by Dongfeng Group on the Shanghai United Assets and Equity Exchange, it marks the official withdrawal of Dongfeng Group from Dongfeng Yueda Kia. As for the future shareholding ratio of the joint venture, it is reported that Kia and Yueda Investment are still in negotiations, and the results are expected to be announced in April next year.
South Korea wants to expand the share ratio Dongfeng feels that it is not profitable
In fact, the rumors about Dongfeng Motor's withdrawal from Dongfeng Yueda Kia have a long history, but they have always avoided talking about it. As early as the middle of this year, Kia, Yueda Investment and Dongfeng Motor have begun negotiations to re-evaluate cooperation. South Korea's Kia side wants to expand the share ratio, and Dongfeng Motor feels that the joint venture company does not make money and wants to exit.
Until November 19, Dongfeng Motor Group Co., Ltd. was listed on the Shanghai United Equity Exchange to transfer 25% of the equity of Dongfeng Yueda Kia Automobile Co., Ltd. at a transfer price of about 297 million yuan. Dongfeng Group's withdrawal from Dongfeng Yueda Kia is a matter of course.
Dongfeng Group feels that the joint venture company is not profitable, that is, in recent years. Before 2016, Dongfeng Yueda Kia in the Chinese market can be said to be smooth sailing, sales continue to rise, shareholders naturally also make money to earn hand hemp.
However, after Dongfeng Yueda Kia climbed to the peak of sales in 2016, it began to go downhill due to reasons that everyone knows well. In 2020, Dongfeng Yueda Kia's annual sales were only 250,000 vehicles, down more than 60% from the highest sales volume of 650,000 vehicles in 2016.
According to the data, in the first 10 months of this year, Dongfeng Yueda Kia's cumulative sales volume was 133,300 vehicles, down nearly 20% year-on-year. The outside world predicts that the annual sales volume will not exceed 200,000 vehicles, continuing the downward momentum.
The decline in sales has also led to poor profit performance, and in 2017, Dongfeng Yueda Kia's net profit turned from profit to loss, and until this year it was still mired in losses. According to the announcement issued by the Shanghai United Equity Exchange, in 2020, Dongfeng Yueda Kia lost more than 4.7 billion yuan and had total liabilities of more than 13.6 billion yuan. Losses in the first 10 months of this year exceeded 2.6 billion yuan, and liabilities totaled more than 11.8 billion yuan. As of November 16, the total assets were about 13.4 billion yuan, the total liabilities were about 13 billion yuan, and the net assets were only about 350 million yuan.
As a shareholding enterprise, Dongfeng Group does not have much substantive management in the follow-up operation, but only plays the role of "dividend". After Dongfeng Yueda Kia went downhill, Dongfeng Motor also spent time and energy to save its decline, but the trend has gone. The "dividend" has disappeared, and it is not easy to save it, and Dongfeng Motor's choice to withdraw may be a very wise decision.
Actively adjust business in China to high-end development
According to the data, Dongfeng Yueda Kia Automobile Co., Ltd., founded in 2002, is jointly held by Dongfeng Motor Company, Jiangsu Yueda Investment Co., Ltd. and South Korea's Kia Automatic Vehicle Co., Ltd., with a tripartite share ratio of 25%, 25% and 50%, and the operating period is from September 12, 1992 to September 11, 2022.
Next year, the shareholding ratio of domestic automobile joint ventures will be liberalized, and Dongfeng Yueda Kia has just caught up with this point. The outside world speculates that the withdrawal of Dongfeng Group may also be a trend, and Kia Co., Ltd. is taking advantage of the trend to expand its shareholding ratio and occupy absolute dominance, which is also more conducive to adjusting its business in China.
Since 2015, the senior management of Dongfeng Yueda Kia has undergone 5 changes, but it has not brought improvement to the business, and finally the more trusted Korean Yoo Changsheng has become the head of Dongfeng Yueda Kia. Liu Changsheng vigorously promoted the revival of the Kia brand in China, not only accelerating the introduction of fuel vehicles but also accelerating the implementation of the new energy strategy.
In September, Kia's global flagship MPV-Jawa was officially launched in China, hoping to start with Jiahua and officially open the road to high-end. At this year's Guangzhou Auto Show, the first electric vehicle model EV6 based on E-GMP was also officially unveiled.
Follow the global rhythm and embark on a full-scale renaissance
At last week's media meeting, Liu Changsheng stressed that Kia's localization strategy in the Chinese market will "turn" away, withdrawing from the established localization strategy of the original tripartite shareholders, and emphasizing that the strategic direction and action rhythm of the Chinese market are further closer to "global Kia". 2022 will be the "first year" of kia's brand's "turn Around" (transformation/rejuvenation plan) in China, and Kia's investment in the Chinese market will not only not decrease but will further increase.
For the future, Kia's plans are also very clear:
First of all, starting next year, Kia will speed up the suspension of low-end entry-level models with a price of less than 100,000 yuan in the Chinese market, no longer blindly pursuing sales, and adhering to the high-end brand route. Stabilize the market competition of high-priced products, put an end to the previous low-price competition strategy, and resist the market pressure of "price for volume".
The second is to accelerate the introduction of new technologies and new products such as hybrid and pure electricity, including mass production of Kia hybrid HEV and plug-in hybrid PHEV models that are fully comparable to Japanese hybrids. From the end of next year or the beginning of 2023, a new electric vehicle will be invested in the Chinese market every year, starting from the form of trying to import electric vehicles to lay out the electric vehicle market. The first electric vehicle to be introduced into the Chinese market will be a pure electric SUV that benchmarks the Tesla Model Y.
The final is to optimize the management and operation of dealers in China. Liu Changsheng said that Kia will next introduce a global unified dealer operation, management and assessment system in the Chinese market, breaking the previous practice of manufacturers achieving short-term sales growth by pressing the warehouse to dealers, and replacing it with user terminal orders to drive upstream production, new car logistics distribution and dealer operations.
As a non-mainstream joint venture brand, Kia has always been a "cost-effective" image in the minds of Chinese consumers, and it is not comparable to mainstream joint venture brands at present, and it is difficult to transform the high-end market. The brand is not as good as the German, Japanese and American systems, the product cost performance can not fight the independent brand, how to let Chinese consumers quickly recognize and accept the Kia brand again, may be the biggest problem in front of Liu Changsheng.