Since Dongfeng officially withdrew from the joint venture, in just one month, Kia and Yueda have made new moves.
On February 7, Kia signed a capital increase agreement with Yueda and Yancheng People's Government. The agreement says the two sides will establish a new joint venture and increase the capital by $900 million. In addition, the new joint venture will also formulate a new development policy in terms of products, capital, and the establishment of export bases.
However, the industry is eagerly aware of the shareholding ratio and name of the new joint venture, the agreement does not mention, only that the joint venture name will be announced in April. According to insiders in an interview, it will be adjusted on the original basis, and the name change is also after the capital increase.
Kia intends to take a controlling stake
Unlike the general joint venture car companies that jointly invest for the two parties, Dongfeng Yueda Kia is a tripartite joint venture. In August 2002, Kia, Dongfeng Company and Yueda jointly funded the establishment of Dongfeng Yueda Kia, and the equity ratio of the three was 50:25:25 respectively.
The three companies have had a fierce debate over the share ratio, but for various reasons the change of the share ratio has not been able to come to fruition. After Dongfeng Yueda Kia fell off the altar, Dongfeng Company had a retreat.
In August last year, Dongfeng, Yueda and Kia signed a memorandum of understanding on Dongfeng's withdrawal of shares. In December of the same year, Dongfeng Company transferred 25% of the equity of Dongfeng Yueda Kia for less than 300 million yuan and formally withdrew from the joint venture.
So far, it is not known whose 25% stake of Dongfeng Yueda Kia has been spent. In this agreement, the amount of each of Kia and Yueda in the 900 million yuan capital increase and the share ratio of both parties have not been disclosed. However, from the perspective of multi-party news and the current form, 25% of Dongfeng's equity will be acquired by Kia, and eventually Kia will complete the holding of the new joint venture.
It is worth mentioning that at the beginning of last year, there were rumors that Hyundai Kia intended to force Dongfeng Company and Yueda to withdraw their shares in order to achieve the purpose of holding the joint venture company.
In 2022, when the joint venture share ratio is officially lifted, Kia has such a move, which inevitably makes people suspicious. In terms of policy, with the national development and Reform Commission's cancellation of the joint venture share ratio, Hyundai Kia has already had basic support, and there are currently a number of joint venture car companies such as BMW and Volkswagen holding successfully.
Policy support is only one of them, and the strength of Jiangsu Yueda is difficult to compete with hyundai Kia, a multinational car company, which is also an important part. Just like BMW holding BMW Brilliance and Volkswagen holding JAC Volkswagen, it is because brilliance and JAC are weaker.
At present, its official website and social platform still use the old name of "Dongfeng Yueda Kia", and the industry predicts that in the near future, the new joint venture company will be renamed "Kia China" more likely. Dongfeng Yueda Kia insiders said in an interview with the media that the new joint venture will be based on Kia operations, and Yueda Group will support it.
However, for the long-term development of the joint venture, Hyundai Kia Holdings will also be more conducive to the development and operation of the company's brand. Some insiders analyzed this.
Kia's last Bo
Since entering the Chinese market, Dongfeng Yueda Kia has once been on an equal footing with German and Japanese brands. From 2012 to 2014, Dongfeng Yueda Kia's annual sales increased by more than 10%. With a price comparable to that of U.S.-made cars, Dongfeng Yueda Kia ushered in a peak of 640,000 deliveries in 2016.
Highlights always come short. The following year, Dongfeng Yueda Kia's sales plummeted like a roller coaster, and the performance was dismal. By 2020, Dongfeng Yueda Kia's annual loss was as high as 4.75 billion yuan.
We will start the change from the inside out, including the implementation of the electric strategy and the adjustment of the organizational structure. Liu Changsheng, general manager of Dongfeng Yueda Kia, once said so.
In this agreement, Kia has elaborated more on its future strategy. In terms of products, Kia will introduce global strategic models and new energy vehicles. Moreover, the new joint venture will also abandon the previous low-price competition model, and "models priced below 100,000 yuan in the future will be discontinued."
Last year, with the departure of local talents such as Li Feng and the succession of Yoo Chang-sheng, the Korean "localization" talent management model almost failed. In contrast, toyota, Volkswagen and many other joint venture car companies are introducing a large number of local executives. In this agreement, Kia also said that the joint venture company will introduce local talents, form a new organizational structure, and actively promote localization development.
Overall, without shareholder constraints, Kia would have gone all out for the world's largest auto market. Cui Dongshu, secretary general of the Association, said that relying on the competitiveness of the global market, Kia should also have the possibility of returning in China. However, some analysts believe that Korean cars, which have been lagging behind the German and Japanese for many years, still have great difficulties in increasing the annual production and sales of only more than 100,000 to a total of 4 million vehicles in 10 years in the next ten years. And if Kia can't revive in two or three years, it will be even more unlikely to reach the previous peak moment in the future.