On the eve of the Spring Festival, the equity of Dongfeng Yueda Kia was changed on January 21. Recently, South Korea's Kia Co., Ltd. signed an expansion investment agreement with Yancheng People's Government and Jiangsu Yueda Group. Song Husheng, President of Kia Co., Ltd., Zhou Bin, Acting Mayor of Yancheng City Government, Zhang Naiwen, Chairman of Jiangsu Yueda Group, and Liu Changsheng, General Manager of Dongfeng Yueda Kia, witnessed the signing of the agreement.
According to the agreement, Kia and Jiangsu Yueda Group will form a new joint venture company, and plan to increase the capital by US$900 million for the introduction of new models, the development of new energy vehicles, and the establishment of export bases, so as to rapidly increase vehicle sales and capacity utilization. The new company name will be released in April this year.
Netizens predict that the new joint venture company will be Yueda Kia or Kia Yueda. Judging from the proportion of equity rumored by the outside world, the equity ratio of the new joint venture company will be adjusted to 75% of Kia and 25% of Yuedaji, so the new company name is more likely, and there is also speculation that the new company will be named Kia China.
The core of this cooperation is whether Kia and Yueda Group can "carry water" together, and whether they can change the embarrassment of "three monks without water to eat" in China in the future.
The Korean car was defeated
On August 18, 2002, Dongfeng Yueda Kia Automobile Co., Ltd. was established, and Kia Co., Ltd., Dongfeng Motor Group Co., Ltd. and Jiangsu Yueda Investment Co., Ltd. accounted for 50%, 25% and 25% of the shares respectively.
In the blink of an eye in the past two decades, Dongfeng Yueda Kia has indeed had a highlight moment in China, and from 2014 to 2016, Dongfeng Yueda Kia sold 646,000 units, 616,000 vehicles and 650,000 vehicles respectively.
From 2017 to 2019, Dongfeng Yueda Kia's sales volume was 359,000 units, 370,000 units and 289,800 units; again affected by the epidemic, Dongfeng Yueda Kia's sales fell to 249,000 units in 2020 and only 152,000 units in 2021.
Not only is the sales decline serious, but Dongfeng Yueda Kia has suffered serious losses. According to the performance pre-loss announcement issued by Yueda Investment on January 29, 2022, the net profit attributable to the shareholders of the listed company for the whole year of 2021 was -1.268 billion yuan, and 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 loss is that Dongfeng Yueda Kia Automobile Co., Ltd., which holds 25% of the company's shares, continued to lose money in 2021 due to factors such as the decline in core production and sales and the increase in precious metals prices, affecting the company's net profit attributable to the mother of about -531 million yuan.
Dongfeng owns joint venture brands such as Dongfeng Honda, Dongfeng Nissan, Dongfeng Dongfeng Peugeot Citroen Automobile, dongfeng Yueda Kia and other joint venture brands in the joint venture field, and in the face of the loss-making business of Dongfeng Yueda Kia, it chose to withdraw.
Nowadays, the preferences and habits of domestic consumers have changed, from the hot pet joint venture in the early years to the preference for domestic independent brands. Where does the new joint venture go?
The sword refers to new energy
The new joint venture said that it will strategically adjust to seek high-quality development, and will increase investment in the Chinese market in 2022, strengthen brand building, improve organizational efficiency, product quality, and improve the level of dealer operation and management.
Specifically, Kia and Yueda will increase the capital of "Dongfeng Yueda Kia" by 900 million US dollars, strategically introduce new models, set up export bases, and focus on promoting the development of global strategic models and new energy vehicles.
Previously, Dongfeng Yueda Kia's main cost-effective models had no layout in the high-end field, and did not have an advantage under the impact of changes in the new energy industry and the efforts of independent domestic brands. Liu Changsheng, general manager of Dongfeng Yueda Kia, said, "No longer take the way of low-price competition, but win the recognition of consumers through the competitiveness of products." In the future, models priced at less than 100,000 yuan will be discontinued as soon as possible and seek high-quality development. "In the future, it is worth looking forward to in terms of strategic adjustment and introduction of new models.
In terms of new energy products, it will mainly focus on models on sale such as Jiahua and Zhipao Ace, as well as new new energy models. Kia will launch a new Sportue SUV and its hybrid version this year, as well as a K3 redesign; it will also take the new pure electric vehicle EV6 as a starting point, and will gradually build a new EV matrix of 6 electric vehicles by 2027, and launch an electric vehicle in the Chinese market every year.
In addition, another major direction of the new joint venture is to integrate global resources and rapidly promote the implementation of global strategies. Despite its poor performance in China in recent years, Kia has performed considerably worldwide, with 2,607,300 units sold globally in 2020 and 2,777,100 units in 2021. In terms of production capacity, Kia has three factories in China, all located in Yancheng, which were put into operation in 2002, 2007 and 2014.
Yancheng is not a large city, the local permanent population is only 6.7 million people, but Yancheng has a special geographical location, is a prefecture-level city with two first-class open ports of airport and seaport, and is the intersection of the two major strategies of national coastal development and Yangtze River Delta integration.
As everyone knows, Yancheng has many Korean enterprises. The local government considers from the aspects of employment and economic level, yancheng needs Kia. The impact of the automobile industry on the local economy is self-evident, and there was Weilai in Hefei, especially in the field of new energy industry.
At the same time, Kia also needs Yancheng, and for Kia, benchmarking Tesla's Shanghai factory, with the support of the local government in Yancheng, the export cost of domestic manufacturing is much lower than the export cost of Korean manufacturing, and Yancheng has become an important export production base of Kia.