The name of the new joint venture will be released in April this year.
Text | Du Qiaomei
On February 7, Kia Co., Ltd. signed an investment expansion agreement with yancheng people's government and Jiangsu Yueda Group.
It is reported that Kia and Yueda intend to form a new joint venture company and will release a new company name in April this year. According to the plan, the new joint venture plans to increase its capital by US$900 million to rapidly increase vehicle sales and capacity utilization rates by expanding investment, introducing new models, developing new energy vehicles, and setting up export bases.
With the establishment of a new joint venture between Kia and Yueda, Dongfeng Yueda Kia, which is about to turn its 30th anniversary, has officially become history.
According to the industrial and commercial registration information, Dongfeng Yueda Kia was established on September 12, 1992, with a business period until September 11, 2022, and was invested by Dongfeng Group and Yueda Investment (600805. SH), South Korea's Kia jointly established, the three parties of the equity of 25%, 25% and 50% respectively. On December 17 last year, the official website of the Shanghai United Assets and Equity Exchange announced that the 25% equity transfer project of Dongfeng Yueda Kia has been delisted at a transfer price of 297 million yuan, but the delisting party has not yet been announced.
In the industry's view, the decline in sales of Kia brands in China in recent years and the continuous losses of the joint venture are the main reasons for Dongfeng Group's exit before the expiration of the joint venture operation period.
According to the data, after the peak of sales of 650,000 vehicles in 2016, Dongfeng Yueda Kia's sales have declined all the way, and the sales volume of Dongfeng Yueda Kia in 2017 has folded to 359,500 units, and its sales volume has dropped to 249,000 units in 2020; compared with only 152,000 units in the past 2021.
The continuous decline in sales has made dongfeng Yueda Kia's operating performance worse. According to the data, from 2017 to the first half of 2021, the net loss of Dongfeng Yueda Kia was 1.123 billion yuan, 492 million yuan, 1.299 billion yuan, 4.75 billion yuan and 1.371 billion yuan, respectively, with a cumulative loss of 9.035 billion yuan in four and a half years.
On January 29, Yueda Investment issued a performance pre-loss announcement that the net profit attributable to the shareholders of the listed company for the whole year of 2021 was -1.268 billion yuan; the net profit attributable to the shareholders of the listed company after deducting non-recurring gains and losses was -1.49 billion yuan. The main reason for the pre-loss of the current period is Dongfeng Yueda Kia Automobile Co., Ltd., which holds 25% of the company's shares, due to the decline in core production and sales and the increase in precious metal prices, the 2021 annual performance continued to lose money, affecting the company's net profit attributable to the mother of about -531 million yuan.
However, with the abolition of the restriction on foreign ownership in passenger car manufacturing and the restriction that the same foreign company can establish two or less joint ventures in China to produce similar vehicle products, and the withdrawal of Dongfeng Group, Kia will also open a new stage of development in China.
As the city where Kia's only production base is located in China, the Yancheng government will fully support Kia's expansion of sales in the Chinese market and support the export trade of Kia's Yancheng plant; in the next decade, Kia has set a target of more than 4 million units in China.
On the one hand, Kia will focus on promoting the introduction of global strategic models and new energy vehicles. The new models launched this year will be equipped with a large number of safety configurations and new technology configurations to further enhance product performance and market competitiveness, and together with models on sale such as Jawa and SmartCar Ace, kia's global strategic model lineup will be improved. From next year to 2027, starting from the new pure electric vehicle EV6, Kia will launch a new electric model in the Chinese market every year, gradually building a new EV matrix of six electric vehicles.
At the same time, Kia will also actively carry out innovative marketing activities to show Chinese consumers the vision of "New Kia" and sustainable future business. With the dealer location as the center, strengthen regional marketing, and effectively increase the consumer brand experience touchpoints; at the same time, continue to carry out "door-to-door test drive" 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, and enjoy a good brand experience.
In addition, the joint venture will build a new organizational structure, establish an innovative organizational culture, actively introduce local talents and professionals, and accelerate the localization work. A relevant person from Kia said, "Kia will accelerate the landing of the 'Global Kia' image in the Chinese market, and form a more efficient decision-making process through organizational structure adjustment, solidly promote the development of various businesses, and start again in the Chinese market." In the future, Kia will continue to deepen its efforts in the Chinese market and explore the most suitable management system for the Chinese market. ”
In addition, the new joint venture will also achieve win-win cooperation with Chinese dealer partners by formulating reasonable operating indicators, continuously optimizing business policies, and rewarding excellent dealers.
It is worth noting that 2022 coincides with the 30th anniversary of the establishment of diplomatic relations between China and South Korea and the 20th anniversary of Kia's brand entry into China, and it is also a key year for Kia to deepen its strategy of brand renewal and 2045 carbon neutrality. Taking this signing as an opportunity, Kia will take root in Yancheng, based on the Turn-around strategy and "All New Kia, All New Start!" "Business policy, accelerate the implementation of global strategy, integrate global resources, better feed the Chinese market, and provide Chinese consumers with more products and services worth looking forward to."