Kia and Yueda increase capital by 900 million yuan to build a new joint venture company plans to produce and sell more than 4 million vehicles within 10 years

Economic Observation Network reporter Zhou Ju at the end of last year Dongfeng transferred the shares held by Dongfeng, after officially withdrawing from Dongfeng Yueda Kia, Kia and Yueda recently had a new move.

On February 7, Kia Co., Ltd. signed an investment expansion agreement with yancheng people's government and Jiangsu Yueda Group. Under the agreement, Kia and Yueda intend to form a new joint venture. The new joint venture plans to increase capital by US$900 million and increase vehicle sales and capacity utilization through expanded investment, the introduction of new models, the development of new energy vehicles, and the establishment of an export base. According to the plan, the name of the new company will be released in April this year.

According to the economic observation network reporter, the new joint venture company between Yueda and Kia will be renamed after the equity adjustment and capital increase on the basis of the original Dongfeng Yueda Kia. In December last year, Dongfeng transferred 25% of the equity of Dongfeng Yueda Kia for 297 million yuan, officially withdrawing from Dongfeng Yueda Kia, and the joint venture company changed from a three-party shareholding to a two-party shareholding of Yueda and Kia.

However, as for the announced capital increase of 900 million yuan, the amount of capital increase of Yueda and Kia, and the shareholding ratio of Yueda and Kia in the future new joint venture, Dongfeng Yueda Kia insiders said, "These all need to be approved by the state, and will not be explained without the approval of the state." However, he stressed to reporters that the equity ratio and name of the new company are no longer important, what is important is that with the support of Yueda Group, the company will focus on Kia operations and disseminate Kia brands and products to the outside world.

It is worth noting that the equity adjustment of Dongfeng Yueda Kia occurred in the context of the policy of officially lifting the restriction on the share ratio of the automobile joint venture from January 1 this year. Based on this, the withdrawal of Dongfeng at the end of last year is considered to be a prelude to Kia's hope to increase its shareholding ratio in the joint venture, and in the new joint venture, Kia's equity increase or even holding or high probability event. Prior to Dongfeng's exit, Dongfeng Yueda Kia Zhongdong Dongfeng Motor Group, Yueda Group and Kia Automobile held 25%, 25% and 50% of the shares respectively.

According to Dongfeng Yueda corporate insiders, in the future, the joint venture between Yueda and Kia will mainly operate the Kia brand, and Kia will focus on promoting the introduction of global strategic models and new energy vehicles. Yancheng will continue to serve as a base for Kia's future business in China.

It is reported that from next year to 2027, starting from the new pure electric vehicle EV6, Kia will launch a new electric vehicle model in the Chinese market every year, and gradually build a new EV matrix of 6 electric vehicles. And kia's 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. In the next decade, Kia plans to produce and sell more than 4 million units in China.

The Kia brand entered China in 2002 and formed a joint venture with Dongfeng and Yueda, Dongfeng Yueda Kia, whose sales have climbed all the way and were once considered to be one of the most promising joint ventures to impact annual sales of one million vehicles, with annual sales of 650,000 vehicles in 2016. However, since 2017, Dongfeng Yueda Kia's sales have continued to decline, and by 2021, it will only be more than 160,000 vehicles.

At the same time, Dongfeng Yueda Kia fell into continuous losses, and the listing information of the Shanghai United Equity Exchange shows that in 2020, Dongfeng Yueda Kia lost a total of 4.75 billion yuan, and the loss in the first 10 months of 2021 was 2.612 billion yuan.

Dongfeng Yueda Kia equity restructuring, Yueda and Kia after the establishment of a new joint venture company, is expected to lead Kia to start again in the Chinese market. The press release pointed out that the establishment of a new joint venture between Kia and Yueda will open a new era of joint ventures.

According to the official introduction, the new joint venture company will build a new organizational structure, establish an innovative organizational culture, actively introduce local outstanding 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. ”

But at the same time, with the increasing number of entrants and the rapid development of intelligent electrification, the competition in China's auto market is becoming more and more intense, and whether Kia can regroup in China is still full of uncertainty.