20 years of "porcelain marriage" finally broken, leaving the East Wind Kia, how to set sail on the downhill road?

A Dongfeng Yueda Kia store Du Ge photo

2022 is the 20th year of kia brand entry into China, but it is also its cooperation with Dongfeng Motor (600006. SH) Group started a new life after the "breakup". With the landing of Kia's $900 million capital increase, "Dongfeng Yueda Kia" has officially become history.

Just after the Spring Festival holiday of the Year of the Tiger, South Korea's Kia Co., Ltd. signed a contract with the Yancheng People's Government and Jiangsu Yueda Group to establish a new joint venture company, increase capital by 900 million US dollars, further expand investment and introduce new models.

However, Yueda and Kia have not yet disclosed information about the new joint venture, whether the specific name is "Yueda Kia" or "Kia China" or other, which will not be revealed until April.

From threesomes to two-person turns, what kind of journey has Kia gone through and what kind of fate will she face?

"Everyone is waiting to see, is Kia or Kia without the east wind, and I hope it will be better." A head of Dongfeng Yueda Kia regional dealer said.

once

Recalling the "marriage" between Dongfeng and Kia for nearly 20 years, there has also been a vigorous beauty.

On August 18, 2002, Dongfeng Yueda Kia Automobile Co., Ltd., which was jointly established by Dongfeng Motor Group, Jiangsu Yueda Group and Kia Automobile, was officially listed, with Kia Motor, Dongfeng Motor Group and Jiangsu Yueda accounting for 50%, 25% and 25% of the shares respectively.

Three months later, Dongfeng Yueda Kia's first new car "Maxima" rolled off the production line in Yancheng, with two engines of 1.3 liters and 1.6 liters to choose from, and the price was set at between 100,000 and 120,000 yuan.

At that time, just as the wave of joint ventures in China's auto industry entered a new stage, almost all Chinese car companies relied on the joint venture model, more than 95% of cars were foreign brands, and the price of a national dream car "Santana" was about 150,000 yuan. The hyundai "Sonata", which is also a Korean car, was launched a month after the "Maxima" rolled off the production line, and the price was about 200,000 yuan.

Therefore, "Maxima" was extremely price-competitive at that time, and it created sales of 50,000 vehicles in just one year of listing, which in turn made Dongfeng Yueda Kia the fastest growing and best-growing enterprise in China's automotive industry in 50 years, and "Maxima" won the title of 50 most influential automotive products.

At that time, some media commented that Dongfeng Yueda Kia had been recognized and praised by the majority of users in a short period of time, which was a miracle in the extremely competitive Chinese automobile market in 2003.

Since then, Dongfeng Yueda Kia has made great strides. At the end of 2004, Maxima's sales exceeded 100,000 units. In 2011, in the case of single-digit growth rate of China's automobile market, Dongfeng Yueda Kia bucked the trend, and its sales increased by 30% year-on-year to 432,500 units, ranking in the top 9 of national car companies. By 2016, its sales in China reached its peak – with annual sales reaching 650,000 units.

This also makes Dongfeng Yueda Kia earn a lot of money. In 2015 and 2016, Dongfeng Yueda Kia's revenue was 63.354 billion yuan and 66.998 billion yuan, respectively, and net profit was 1.020 billion yuan and 1.493 billion yuan, respectively.

In February 2017, Su Nanyong, then general manager of Dongfeng Yueda Kia, was full of confidence and proposed to lead Dongfeng Yueda Kia to implement the New 2020 strategy and achieve the sales target of 700,000 vehicles in 2017 and the sales target of one million vehicles in 2020. And said: "Dongfeng Yueda Kia's development prospects are bright, we will achieve a second leap in development." ”

At that time, Su Nanyong must not have imagined that it was from this year that Dongfeng Yueda Kia experienced the darkest moment of sales Waterloo, and there was no Dongfeng Yueda Kia in China.

Right now

The speed at which Dongfeng Yueda Kia fell from the peak is truly amazing. Public data show that in 2017, Dongfeng Yueda Kia's annual sales plummeted to 359,500 vehicles, almost waist-cutting year-on-year. From 2018 to 2021, Dongfeng Yueda Kia sold 370,000 units, 289,800 units, 249,300 units, and 163,400 units, respectively.

With the decline in sales, Dongfeng Yueda Kia also began to turn from profit to loss. Yueda Investment (600805. SH) financial report shows that from 2016 to 2020, the operating income of Dongfeng Yueda Kia was 59.461 billion yuan, 29.933 billion yuan, 33.419 billion yuan, 23.281 billion yuan and 21.94 billion yuan, respectively; the net profit attributable to the parent company was 1.493 billion yuan, -1.123 billion yuan, -492 million yuan, -1.299 billion yuan and -4.75 billion yuan, respectively.

As of now, the performance of Dongfeng Yueda Kia in 2021 has not yet been released, but Yueda Investment has issued a pre-loss announcement on January 29 this year, saying that Dongfeng Yueda Kia, which holds 25% of the company's shares, continues to lose money in 2021 due to factors such as the decline in core production and sales, affecting the company's net profit attributable to the mother of about -531 million yuan.

Dongfeng Yueda Kia's "decline", dealers undoubtedly feel the most deeply. At the beginning of this year, a person in charge of a Dongfeng Yueda Kia dealership took several photos of the exhibition hall and sent them to the circle of friends, with the text: "Is this a car showroom or a car warehouse." "I feel that the inventory pressure is too great.

Why has it been going downhill? An industry insider told the "car circle visibility", from the perspective of the industry, the overall market is sluggish, has been saturated, the current consumers buy mostly for the purpose of replacement, generally will choose high-end luxury brands, and low-end brands are facing the "test of life and death"; from the perspective of Dongfeng Yueda enterprises themselves, mostly low-end models, and the force of new energy is late, in today's domestic brands continue to strengthen, its competitiveness is not as good as before.

In addition, in the 20 years of cooperation, Dongfeng Yueda Kia has also repeatedly reported infighting. The media has reported that in addition to the differences in language and interests in the tripartite joint venture, the structure of the share ratio also brings friction. When discussing issues, it often takes a long time to form a unified opinion.

Since 2017, Dongfeng Yueda Kia has frequently changed its general manager, and has changed 5 general managers in 5 years, of which in 2019, it also introduced Li Feng, a Chinese general manager, for the first time to cater to the Chinese market. But this frequent rotation has left dealers and internal employees confused, further exacerbating turmoil and unrest.

Perhaps it is impossible to see the deterioration of Dongfeng Yueda Kia, coupled with its own new energy vehicle brand "Lantu" is exactly the time when money is needed. In November 2021, Dongfeng Motor Group officially transferred its 25% stake in Dongfeng Yueda Kia on the Shanghai United Assets and Equity Exchange for RMB297 million.

In this three-person movie, Dongfeng no longer needs a name.

future

Fortunately, Dongfeng's withdrawal did not affect the cooperation between Kia and Yueda. The listing ended on December 16 last year, and Yueda Automobile Group became the only bidder. At present, the official has not pointed out the respective shareholding ratios of Yueda and Kia, and the market speculates that Kia may strive for a larger share ratio and control.

However, the two sides recently said that they will increase their capital by 900 million US dollars, with a common goal of producing and selling more than 4 million vehicles in China in the next 10 years. It can be seen that kia brands still want to fight in the Chinese market.

How to beat? Liu Changsheng, the new general manager of Dongfeng Yueda Kia, revealed that one is to abandon the cost-effective label, take the high-end route, continue to invest in new products and new technologies, and reduce the inventory pressure of dealers; the second is to focus on promoting the development of global strategic models and new energy vehicles, starting from next year to 2027, launching an electric vehicle every year, and gradually building a new EV matrix of 6 electric vehicles.

According to Hyundai Kia Group's planning, by 2030, the global sales target of new energy vehicles is 3.5 million units, of which Kia's new energy product sales target is 1.6 million units, and the proportion of hybrid and pure electric sales in the Chinese market is planned to reach 50:50.

Liu Changsheng stressed that 2022 will be the first year of Kia's brand innovation in China.

However, freezing three feet is not a day's cold. In terms of brand positioning, consumers' deep-rooted impression of Dongfeng Yueda Kia is difficult to change. For example, in the second half of last year, Dongfeng Yueda Kia successively launched the new K5 Kaiku and the fourth generation of MPV models, with prices ranging from 161,800 yuan to 339,900 yuan, trying to transform consumers' perception of their own low-end.

And the answer given by the market is not ideal. Among them, as of December 2021, the cumulative sales of the fourth generation of Jiahua are only 2823 vehicles, and the average monthly sales volume is less than 1000 vehicles.

In the field of electrification, the Kia brand started late and has long lost its opportunity. In the words of the head of the above-mentioned Dongfeng Yueda Kia regional dealer, "The outbreak of electric vehicles, the State Grid is engaged in experience centers, and Koreans are still dreaming." ”

In addition, the current competition in China's new energy vehicle market is extremely fierce, in addition to traditional brands such as Volkswagen, BYD, Roewe, Geely, etc., Kia brands also have to face a number of new car-making opponents such as Weilai, Weima, and Ideal, as well as cross-border players, and how difficult it is to get a piece of the pie.

After Dongfeng withdraws, it is a new opportunity for Yueda and Kia to free up their hands and feet. However, thirty years east of the river and thirty years of he west. Compared with when Kia first entered China, the domestic car market has undergone tremendous changes. What the future holds, it is difficult to decide.

Author | Moons

Edit | Wan Jiali

Source | CarVisibility

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