Kia and Yueda plan to increase their capital by USD 900 million and will announce the names of the new joint venture in April

On February 7, Kia Co., Ltd. (hereinafter referred to as "Kia") signed an investment expansion agreement with the People's Government of Yancheng City and Jiangsu Yueda Group (hereinafter referred to as "Yueda"). Kia and Yueda will form a new joint venture and will release a new company name in April this year. The new joint venture plans to increase capital by USD 900 million and rapidly increase vehicle sales and capacity utilization through expanding investment, introducing new models, developing new energy vehicles, and setting up an export base.

Earlier, Dongfeng Yueda Kia Automobile was a tripartite joint venture of Dongfeng Motor Group, Yueda and Kia, with a three-party shareholding ratio of 25%, 25% and 50% respectively. At the end of December 2021, Yueda, as the sole bidder, delisted 25% of the equity of Dongfeng Yueda Kia Automobile listed by Dongfeng Motor Group. Dongfeng Yueda Kia relevant people told the first financial reporter that after the national policy on the liberalization of the joint venture share ratio landed, the company's equity structure will be adjusted again, and will eventually form the state of Kia Holdings.

In an exclusive interview with the first financial reporter, Liu Changsheng, general manager of Dongfeng Yueda Kia, said that the new joint venture company will integrate into Kia's global management system as a whole, including organizational structure, products and technologies, and gradually fully integrate with Kia's global standards. The reporter found that in a public relations activity of Dongfeng Yueda Kia in January this year, the payment of relevant documents has been changed from the past Dongfeng Yueda Kia Automobile to Kia Automobile Co., Ltd.

Liu Changsheng told reporters that during the reform transition period, Dongfeng Yueda Kia will be led by the Korean side and establish a management decision-making system with Kia Global, and each department will have only one person in charge, and there will no longer be a double-signature system. After the transition period is over, the new company will follow Kia's other overseas markets, using a large number of localized talents within the company, and even the general manager may be Chinese.

Kia said it set a target of more than 4 million vehicles in China over the next decade. At present, Dongfeng Yueda Kia has a total of 3 factories in China, with a total design capacity of 900,000 vehicles, one of which has been leased to the new power car company Huaren Express in 2019, and the total production capacity of the remaining two factories has reached 600,000 vehicles. According to data released by Dongfeng Motor, Dongfeng Yueda Kia sold 163,400 vehicles in China in the whole year of 2021. After the establishment of the new joint venture, Kia will transform its second plant into a global export base according to the global business needs and capacity layout, alleviating the company's overcapacity pressure.

Kia will focus on promoting the introduction of global strategic models and new energy vehicles. In 2023, From Asia will introduce ev6 electric vehicles based on the E-GMP platform in China, and by 2027, Kia will launch new electric products in the Chinese market every year, building a pure electric product matrix composed of 6 electric models.

Liu Changsheng said that from 2022 onwards, it will maintain the rhythm of one fuel vehicle and electric vehicle per year to launch new products, and abandon the practice of multi-generational co-ownership, the product system is consistent with the world, and more attention will be paid to the precipitation of product brand equity. In addition, Kia will also discontinue production of models under 100,000 yuan as soon as possible.

In terms of dealer channels, the number of dealers at Dongfeng Yueda Kia has dropped from more than 500 at the peak of sales to more than 300 at present, and many dealers are in poor operating conditions and low channel capabilities. Kia said that the new joint venture will focus on the location of the dealer, strengthen regional marketing, and effectively increase the contact points of consumer brand experience; at the same time, continue to carry out "door-to-door test driving" and "door-to-door service" throughout the year, so that consumers can test drive new cars at home and meet the basic after-sales service.

At the same time, the new SI (Terminal Image System) will be applied to all 4S stores and city exhibition halls. Dongfeng Yueda Kia insider said: "From 2022 onwards, our dealer store image will be upgraded, and there will be no more corporate names on the storefronts in the future, only the brand name Kia Motors, which is the future direction." ”