The joint venture process came to an end, and the 25% equity of Dongfeng Yueda Kia was transferred

[News-Oxcart Network]

A few days ago, Chinatown.com inquired about the information on the official website of the Shanghai United Property Rights Exchange and learned that Dongfeng's listed transfer of 25% of the equity of Dongfeng Yueda Kia has been delisted, and the transfer price is 297 million yuan. At this point, Dongfeng Motor Group (hereinafter referred to as "Dongfeng Company") announced its formal withdrawal from Dongfeng Yueda Kia, and the future joint venture company share ratio is still in negotiation with Yueda, and the final result will be announced in April 2022.

Dongfeng Yueda Kia was established in 2002 as a joint venture between Dongfeng Company, Jiangsu Yueda Investment Co., Ltd. ("Yueda") and South Korea's Kia Motor Co., Ltd. ("Kia"), with a shareholding ratio of 25%, 25% and 50% respectively.

After entering the Chinese market, Dongfeng Yueda Kia once had a smooth ride, and climbed to the peak of sales in 2016, with a cumulative annual sales of 650,000 vehicles. However, due to the entry of the Chinese auto market into a downward channel, coupled with the shortcomings of the internal product cycle, operation and management model, dongfeng Yueda Kia has since begun to drive into the downhill road, and by 2020, the annual sales volume is still less than 250,000 vehicles, compared with the peak time sales decline of more than 60%.

According to the listing information of the Shanghai United Assets and Equity Exchange, in 2020, Dongfeng Yueda Kia lost a total of 4.75 billion yuan and had a total debt of more than 13.6 billion yuan; from January to October this year, the loss amount reached 2.612 billion yuan, and the total liabilities exceeded 11.8 billion yuan. According to the relevant valuation report, as of the end of March 2021, the net assets of Dongfeng Yueda Kia were only 350 million yuan, and the appraised value was 1.188 billion yuan. The business difficulties are highlighted.

The performance of the joint venture has declined, and shareholders are hoping to find another way out. In the process of joint venture project development, Dongfeng Company accounted for 25%, and mainly to provide it with vehicle production licenses, did not invest too many resources, and did not have much say in the operation and management mode of the enterprise, and actively withdrawing may be a wiser choice.

In 2022, the domestic auto joint venture company share ratio is about to be fully liberalized, after the withdrawal of Dongfeng Company, whether Kia will seize the opportunity to expand the equity ratio and further strengthen its dominance in China, next April, the possible answer will surface.