Dongfeng withdraws yueda to take over Kia shareholders in China "three changes two"

With the delisting of 25% of the shares, Dongfeng Yueda Kia officially went to "Dongfeng", but the delister was not Kia. On the evening of December 21, Jiangsu Yueda Investment Co., Ltd. (hereinafter referred to as "Yueda Investment") announced that Jiangsu Yueda Automobile Group Co., Ltd. (hereinafter referred to as "Yueda Automobile Group") delisted 25% of the equity of Dongfeng Yueda Kia Automobile transferred by Dongfeng Motor Group Co., Ltd. (hereinafter referred to as "Dongfeng Limited").

Previously, there were rumors that Kia would take over 25% of dongfeng Yueda Kia's equity transferred by Dongfeng Limited, thereby holding Dongfeng Yueda Kia with 75% of the equity. However, in the end, Yueda intervened, and the shareholder structure changed from three parties to "two parties". With the limited withdrawal of Dongfeng, how the shareholders of both sides pulled Yueda Kia out of the sales quagmire became the focus.

Still Chinese and Korean shareholders are divided equally

According to the announcement issued by Yueda Investment, the "Proposal on Waiving the Limited Transfer Right and Forming a Joint Investment with Related Parties" was deliberated and passed. According to the proposal, Dongfeng Limited will publicly list its 25% stake in Dongfeng Yueda Kia through the Shanghai United Equity Exchange from November 19 to December 16, 2021, with a listing price of 297 million yuan. At the end of the listing, Yueda Automobile Group was the only bidder.

The relevant person in charge of Yueda Investment said that as a shareholder of Dongfeng Yueda Kia, considering its subsequent capital increase needs and the company's own operating conditions, it gave up the right of first refusal of this equity transfer. Since Yueda Automobile Group is a related legal person of Yueda Investment, Yueda Investment waived its right of first refusal to form a joint investment with related parties, constituting a related party transaction.

Before the completion of the equity transfer, the shareholding structure of Dongfeng Yueda Kia was 50%, 25% and 25% of the shares held by Kia Co., Ltd., Dongfeng Limited and Yueda Investment. After the completion of the equity transfer, the shareholding structure became 50%, 25% and 25% each held by Kia Co., Ltd., Yueda Automobile Group and Yueda Investment.

At the beginning of November this year, it was reported that Dongfeng Group would transfer its 25% stake in Dongfeng Yueda Kia on the property rights exchange. Subsequently, a person familiar with the report revealed that "in the middle of this year, the three shareholders have launched negotiations to re-evaluate cooperation. Coincidentally, Yueda Automobile Group was only established on June 18 this year, and Jiangsu Yueda Group Co., Ltd. (hereinafter referred to as "Yueda Group") and Yancheng State-owned Assets Investment Group Co., Ltd. held 70% and 30% of the shares respectively. Some insiders speculate that the establishment of Yueda Automobile Group may be the tripartite paving the way for the early transfer of equity in the later stage.

However, at that time, there was news that Kia intended to take over 25% of the equity, and after the transfer, the joint venture would become a foreign-controlled enterprise, becoming the first company to "eat crabs" next year. However, judging from the results of shareholder distribution, Dongfeng withdrew and Yueda Automobile Group joined, so that Dongfeng Yueda Kia will also become Yueda Kia. As the actual controller of Yueda Automobile Group and Yueda Investment, Yueda Group indirectly holds 50% of the shares of Dongfeng Yueda Kia, although the shareholding structure is still three parties, but in fact, Yueda Group and Kia Co., Ltd. hold 50% of the shares, and the shares are still equally divided between China and South Korea.

How Kia explored the way

After Dongfeng's limited withdrawal and equity redistribution, how to boost Kia's sales in China has become the key.

In fact, dongfeng's limited withdrawal is not unrelated to the sluggish sales volume of Dongfeng Yueda Kia in the past two years. In the early days of entering China, Dongfeng Yueda Kia's sales volume climbed all the way with the cost-effective advantage of the model. According to the data, in 2016, Dongfeng Yueda Kia sold 650,000 vehicles, ranking 11th in the sales list of Chinese passenger car companies that year. However, since the beginning of 2017, Dongfeng Yueda Kia sales have fallen rapidly, with annual sales falling to 359,500 vehicles; in the first three quarters of this year, Dongfeng Yueda Kia sales were only 111,600 vehicles. Compared with the Chinese market, Kia Global Markets sold 5.032 million Hyundai Kia vehicles in the first three quarters of this year, becoming the second largest automobile group after Toyota and Volkswagen.

However, in the face of the sharp decline in Kia's sales in China, what did the shareholders use to wake up the joint venture? Speaking about the development in China, Liu Changsheng, general manager of Dongfeng Yueda Kia, said: "We will start new changes from within, including unified brand image, the implementation of electrification strategy, organizational structure adjustment and the introduction of high-quality products. ”

For the model, Kia has made it clear that it will get rid of the "cost-effective" label. Liu Changsheng revealed: "In the future, models priced at less than 100,000 yuan, we will stop production as soon as possible and begin to seek high-quality development." The Smart Run Ace and The Jiahua MPV, which went on sale this year, are the first products of Dongfeng Yueda Kia to reshape consumer groups and test the high price range. Among them, the official price range of Jawa is 288,900-339,900 yuan, which is the first model of Dongfeng Yueda Kia to sell for more than 300,000 yuan.

Liu Changsheng said that the launch of Jawa is of great strategic significance for Kia to improve quality, and Kia's current average official guidance price in the Chinese market has increased significantly compared with 130,000-140,000 yuan in previous years. In addition, at the end of next year or the beginning of 2023, Yueda Kia will invest a new electric vehicle in the Chinese market every year, and Kia will also have imported models enter the Chinese market before 2023.

In addition to the introduction of more high-quality models, Jiangsu Yancheng will become an important hub for Kia's production and export. At the same time, Kia will focus on the needs of Chinese consumers and will increase investment in technology research and development in China. "China is not only the world's largest auto consumer market, but also an important position for automotive industry innovation. Kia will not demand the Chinese market by global standards, and the Chinese market may borrow from the United States or learn from other Chinese brands to integrate a good management model into the management of China Kia. Liu Changsheng said.

Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, said that although the equity of the three shareholders has actually become equally divided between the two parties, as the theme of product import and research and development, Kia still has a higher right to speak, and after the equity change, Kia can reorganize the joint venture in China to pave the way for restart.

Beijing Business Daily reporter Liu Yang liu xiaomeng