"Beijing Hyundai may be brewing a change in the joint venture share ratio." A few days ago, a source who did not want to be named revealed to the "Daily Economic News" reporter that Hyundai Motor Group is beginning to increase its shareholding ratio in the Chinese joint venture Beijing Hyundai, or to follow Kia's role in the new joint venture company and seek more dominance.
In this regard, Modern China responded to the "Daily Economic News" reporter that "no relevant news has been received", while Beijing Hyundai has not replied as of the press release.
Hyundai's desire to strengthen its dominance in the joint venture has long been rumored. As early as mid-2021, there was news that Hyundai motor was ready to increase its investment at the end of the year to increase its shareholding ratio in Beijing Hyundai, at the cost of the recovery of the industrial land it had acquired for the construction of the first factory. At that time, Beijing Hyundai did not respond to the rumors. Today, the first plant of Hyundai in Beijing has been taken over by Ideal Automobile.
Image source: Per reporter Zhang Jian photographed (photo network)
"From Suzuki Motor's withdrawal from the joint venture Changan Suzuki to the change in the share ratio of Dongfeng Renault, FAW Mazda and Dongfeng Yueda Kia, many cases reflect that the dividend period for joint venture car companies to enjoy the Chinese auto market has passed. With the intensification of brand differentiation, many joint venture car companies have encountered challenges in their operations, and their pursuit of equity changes may be to break through the current predicament and find new development opportunities. Cui Dongshu, secretary general of the National Passenger Car Market Information Joint Association, said.
Beijing Hyundai suffered difficult times
Rumors of a change in the share ratio are rife
In the face of rumors of Beijing Hyundai's share ratio adjustment, in January this year, Cui Dongyou, general manager of Beijing Hyundai, responded in an interview with the media: "Hyundai has no plans to adjust the equity ratio of Beijing Hyundai, and the joint venture contract between China and South Korea will only expire in 2032." However, he also admitted that the market performance of Beijing Hyundai in 2021 will decline from the previous year.
Judging from global market sales, Hyundai's performance last year was not unsatisfactory. According to the sales data released by Hyundai Motor Group, despite the adverse impact of the global epidemic and supply chain management problems, Hyundai Motor's global sales volume in 2021 still reached 3.891 million units, an increase of 3.9% year-on-year. Together with Kia Motors' market sales, Hyundai Motor Group also achieved the fourth best result in global sales, after Toyota Motor, Volkswagen Group and Renault-Nissan-Mitsubishi Alliance. This means that Hyundai's technology research and development and product strength are not inferior, but in the Chinese market, this Korean car company seems to have lost its way.
As Hyundai Motor's main joint venture in the Chinese market, Hyundai Beijing's current market performance is very distressing for Hyundai Motor. According to public data, Beijing Hyundai's cumulative sales in 2021 are about 385,000 vehicles, down 23.3% year-on-year. This is the fifth year since 2017, when Sales of Beijing Hyundai declined. This year, Beijing Hyundai also failed to achieve its sales target of 560,000 yuan set in early 2021, with a target completion rate of only 68.75%.
Image source: Per reporter Zhang Jian photographed (data map)
To stop the decline, in 2021, Beijing Hyundai launched a series of "self-help" actions: in terms of product layout, in 2021, Beijing Hyundai's new listing and replacement of new cars reached 6 models, covering multiple subdivisions; at the level of personnel appointment and dismissal, several senior executives have left one after another, leaving Executive Deputy General Manager Du Junbao to stick to; in terms of sales and service network, the number of dealers will be reduced to 590, trying to solve the problems of dealer profitability and the overall operational efficiency of the sales and service network.
However, the above measures still failed to help Beijing Hyundai turn the tide, and Beijing Hyundai's top management is also reflecting on the problem. "After market research, it was found that Chinese consumers still hope that Hyundai Motor's global models can be launched in the Chinese market at the same time, and many consumers were dissatisfied with the fact that many of our models were listed first in the United States and European markets, and the Chinese market was relatively lagging behind Europe and the United States." Cui Dongyou said in an interview with the media that Beijing Hyundai will anchor the Transformation of the Chinese Market and seek high-quality growth by landing a more pragmatic and flexible localization strategy on the intelligent and electrified track.
However, there is a view that if you want to achieve the flexible localization strategy mentioned by Cui Dongyou, the rhythm of brand technology and product introduction will closely follow the changes in the Chinese market, and if Hyundai Motor's equity in the joint venture company increases, the right to speak will be enhanced, so as to grasp the greater initiative in product layout. This may also be one of the important reasons why there are constant rumors that Hyundai Motor intends to increase its stake in Beijing Hyundai.
However, the source also said that although Hyundai Motor has the intention to strive for the equity of Beijing Hyundai, it has not yet reached an agreement with BAIC, and the final result remains to be seen.
Restrictions on the share ratio have been relaxed
A number of joint venture car companies have taken action
In fact, with the relaxation of the restrictions on the joint venture share ratio in the automobile industry in 2022, a number of joint venture car companies have announced that they will adjust the share ratio.
BMW Brilliance Automobile Co., Ltd. (hereinafter referred to as BMW Brilliance) became the first car company to eat crabs. On February 11, BMW Brilliance's new joint venture contract came into effect, the BMW Group's shares in BMW Brilliance were officially changed to 75%, Brilliance China Automotive Holdings Co., Ltd. indirectly held the remaining 25% of the shares, and the cooperation period between the two parties was extended to 2040.
Also interested in capital increase is the Stellantis Group. In January, Stellantis Group announced on its official website that it plans to increase its shareholding in GAC FCA, a joint venture with Guangzhou Automobile Group Co., Ltd. ("GAC Group"), from 50% to 75%, and that GAC Group and Stellantis have agreed to the relevant procedures for the transaction, but still subject to regulatory approval.
However, GAC Group subsequently issued a statement saying that the equity adjustment was not approved by GAC, and the two parties have not yet signed a formal agreement on the equity adjustment of GAC FCA. Some people believe that although Stellantis and GAC Group may not have reached a final agreement on equity adjustment, Stellantis' willingness to increase its shareholding ratio has been revealed.
In addition, at the beginning of February this year, South Korea's Kia Co., Ltd. (hereinafter referred to as Kia) and Jiangsu Yueda Group announced a capital increase of 900 million yuan to establish a new joint venture, and announced that they will release a new company name in April this year. Although whether the equity ratio of the two parties will change after the capital increase has not yet been disclosed, for Kia, after the withdrawal of Dongfeng, in the context of the relaxation of the shareholding ratio of joint venture car companies and the restart of The Korean senior management of Dongfeng Yueda Kia, It is more likely that Kia will strive for a larger share ratio and control in the future, and the industry also believes that Kia's development in China is expected to be more independent.
Kia Motors and Hyundai Motor belong to the same group. If Kia breaks through the restrictions on the joint venture share ratio in the Chinese market and has more say in Dongfeng Yueda Kia, then Hyundai Motor will inevitably not consider the equity relationship of Beijing Hyundai.
"The liberalization of the restrictions on the shareholding ratio of the automobile industry and the unlimited number of joint ventures will help foreign-funded car companies to maximize the use and give full play to the flexibility given by the policy and improve the operational efficiency in China." At the same time, the importance of foreign enterprises to the Chinese auto market will be further strengthened, and the design and research and development of automotive products that meet the preferences of Chinese consumers will become the mainstream. Zhang Hongzhuo, chairman of the Automotive Working Group of the European Union Chamber of Commerce in China, said.
However, Beijing Hyundai is of great significance to BAIC Group, which accounted for 42% of its sales at the high point of 2015. In recent years, although Beijing Hyundai's sales have declined continuously, its position in the BAIC Group is still very important. Whether BAIC will agree to Hyundai's demand for a share ratio adjustment is currently more difficult for Hyundai Motor.
"After the full liberalization of the stock ratio, there may be some changes in the domestic auto market, but in the end, it depends on the contribution and ability of The Chinese and foreign parties in the joint venture company." On the one hand, in recent years, Chinese car companies have grown rapidly and have already possessed considerable confidence and strength; on the other hand, foreign companies want to increase their shares in joint ventures in China, whether from the perspective of capital or localization development, the difficulties and challenges are not small. Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said.
Reporter | Li Shuo
Edited | Duan Lian, Pei Jianru, Wang Jiaqi
Proofreading | He Xiaotao
| the original article of the daily economic news nbdnews |
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