Written by / Cheng Chen, Weekly Magazine of Finance and Economics
Edited / Mao Shiyang
The joint venture stock ratio is loose, and the South Korean side tries to "take power"
Following the withdrawal of Dongfeng Company, the shareholding structure of Dongfeng Yueda Kia has changed again.
On the evening of March 1, Jiangsu Yueda Investment Co., Ltd. (hereinafter referred to as Yueda Investment) announced that it would abandon its participation in Dongfeng Yueda Kia's capital increase plan of US$600 million. With yueda investment abandoning the capital increase, the equity ratio of Kia, Yueda Automobile and Yueda Investment in the new joint venture will be changed to 50%: 45.8%: 4.2%.
In the view of industry insiders, the joint venture party Yueda Investment does not participate in the capital increase, which is related to the loss faced by Dongfeng Yueda Kia, and if the capital increase continues, it will adversely affect Yueda Investment as a listed company. Although Yueda Investment was abandoned, its share is expected to be funded by Yueda Group.
It is worth noting that on December 17, 2021, Dongfeng just transferred 25% of the equity of Dongfeng Yueda Kia at a transfer price of 297 million yuan. Subsequently, Dongfeng Group officially withdrew from Dongfeng Yueda Kia.
With the withdrawal of one of the two major Chinese shareholders and the other not participating in the capital increase, Kia began to seek a greater voice. "Finance World" weekly learned that the current 50% shareholding ratio of Kia in Dongfeng Yueda Kia is still not the final plan, after the withdrawal of Dongfeng Group, the future share ratio of the joint venture company is still under negotiation, and the results are expected to be announced in April.
Behind this, 2021 is the "first year" of the liberalization of the foreign equity ratio of automobile companies, after due to policy restrictions, foreign ownership in domestic automobile companies was capped at 50%. As a result, Kia maintained that share of the deals completed at the end of last year.
According to sources close to Dongfeng Yueda Kia, it was revealed to the "Finance world" weekly that due to the relatively weak voice of Yueda Automobile in the technical level, after the withdrawal of Dongfeng, the follow-up South Korean side on behalf of Kia is expected to obtain the dominance of the joint venture company.
Hyundai Kia Group has two joint venture car companies in China, in addition to Dongfeng Yueda Kia, there is also a well-known joint venture car company Beijing Hyundai, and the South Korean side is also seeking to dominate Beijing Hyundai. It is reported that Hyundai Motor (China) hopes to follow Kia's role in the new joint venture company Dongfeng Yueda Kia to dominate Beijing Hyundai.
Although Hyundai Motor (China) did not comment, it responded that it had not received relevant news at the moment. On the issue of the adjustment of the share ratio, compared with the ambiguity of Hyundai Motor (China's) reply, Du Junbao, the executive of BAIC, Beijing Hyundai, responded directly in January this year, "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." ”
But in fact, as early as mid-2021, it was reported that Hyundai Motor planned to increase investment at the end of the same year to increase the proportion of South Koreans' shareholding in the joint venture car companies, at the cost that one of its factories in Shunyi, Beijing, would be recovered. Today, a factory has been taken over by the ideal car, one of the new car manufacturers.
In the Korean joint venture system, the game between the Chinese side and the South Korean side has long existed. According to the usual practice, the general manager and deputy general manager of a joint venture automobile company in China are generally appointed by each of the two parties to the joint venture, and which party appoints the person in charge of key departments such as marketing and manufacturing, the voice of this party in the joint venture company is heavier.
"Finance and Economics" Weekly learned that in the joint venture car companies of the Dongfeng system, the core executives are often appointed from within the Dongfeng system, and Dongfeng Yueda Kia is almost the only exception, "uncontrolled" plus serious losses in performance, which is the reason why Dongfeng Group chose to withdraw. In Beijing Hyundai, South Korean executives are now beginning to have more resources.
According to the data, in March 2020, Xiang Dongping was appointed vice president of Hyundai Motor (China), representing Han Fang as deputy general manager and director of the sales headquarters of Beijing Hyundai; 3 months later, Li Hongpeng was again appointed as vice president of Hyundai China Business.
It is worth noting that although the above two executives represent the Korean side, both are Chinese nationals, which was unimaginable in the past. As is customary, Hyundai Kia's senior executives in China are appointed by the group as Korean managers.
Behind this, the anxiety about the Chinese market has led Hyundai Kia to relax the personnel appointment system rarely, use Chinese executives, and implement local management. In another joint venture, in September 2019, Li Feng was appointed vice president of Kia China and general manager of Dongfeng Yueda Kia, also a Chinese national.
However, the appointment of the three local executives has made the industry think that 2020 may be a turning point in the development of Korean cars in China. But once again, the market is showing its cruelty. This year, the sales volume of the two joint ventures still fell at a double-digit level.
In this regard, Li Feng and Xiang Dongping have publicly stated on many occasions that the revival of the joint venture will take time.
The South Korean side obviously did not have much patience. After a year and a half in office, Li Feng left in March 2021 and was replaced by Korean executive Yoo Chang-seung. Xiang Dongping and Li Hongpeng also left one after another. This is believed by the industry that Hyundai Motor has negated a more open and localized talent management model and returned to the business ideas led by the Korean side.
However, compared with the "uncontrolled" Dongfeng Yueda Kia in the Dongfeng joint venture system, Beijing Hyundai and BAIC Group are closer in terms of corporate culture, organizational structure and talent recruitment.
"The airborne Representatives of the South Korean side are difficult to integrate into the internal system structure." Beijing Hyundai insiders told Caijing Weekly.
Korean cars were defeated at the University of China
Behind the frequent personnel changes and the competition for the right to speak is the collapse of the Business of South Korea's Hyundai-Kia Group in China.
South Korea-based Hyundai Kia Group will sell 6.87 million units worldwide in 2021, ranking fourth among global car companies, and if compared globally, its comprehensive strength is still stronger than domestic independent brands. Outside of China, Hyundai-Kia's sales have fluctuated in the range of about 1% in recent years. However, in China, Hyundai Kia has frequently encountered Waterloo and even fallen into operational difficulties.
In 2021, Beijing Hyundai's annual wholesale sales plummeted to 385,000 units, only one-third of the annual sales of 1.14 million units in 2016. This is already the "five consecutive declines" in Beijing Hyundai's annual sales. In the same period, Dongfeng Yueda Kia, which also relies on the "cost performance" advantage, also experienced a development trajectory from a peak of 650,000 vehicles in 2016 to 159,000 vehicles in 2021.
Combined, Hyundai-Kia Group's net sales in China in 2021 were more than 1.24 million units less than at its peak in 2016, compared with Geely, the "autonomous brother", which sold 1.32 million vehicles in 2021 and 1.28 million vehicles in the same year. The sales volume of Korean cars that fell was almost equal to the volume of Geely and the Great Wall.
As sales volumes fell, the problem of overcapacity also surfaced.
Not long ago, there were media reports that Beijing Hyundai's factory in Chongqing may be in a state of shutdown. In response, Beijing Hyundai responded that it had not received any internal documents related to the suspension of production.
But in fact, the Chongqing factory may no longer have orders available for production.
According to public information, the chongqing plant put into production models such as Rena, Fiesta, Oncino and ix25 A0-class and A-class models. Among them, Rena, which has not been replaced for a long time, is currently in a state of suspension. In the first year after the launch of Festa, cumulative sales reached 99,000 units, but sales have continued to decline since 2020. As of December last year, Fiesta and Oncino's monthly sales were only double digits.
Before the sale of the first factory, Beijing Hyundai layout had five major factories, namely the first, second and third factories in Beijing, the Cangzhou factory, and the Chongqing factory. Among them, the Chongqing plant, which has the latest layout, has a planned annual production capacity of 300,000 vehicles and 300,000 engines. When completed, the total production capacity of the five major plants will reach 1.65 million units.
In mid-2021, Ideal Auto officially took over a factory in Shunyi by Beijing Hyundai, which at its peak had an annual production capacity of 300,000 units and had been in a state of suspension for a long time before changing hands.
In September of the same year, the second factory of Beijing Hyundai was exposed for sale, although Beijing Hyundai's emergency "firefighting" denied it, but since then the discussion on the destination of the second factory has not stopped. Even in the case that a factory has been sold, with Beijing Hyundai's annual sales of 385,000 vehicles in 2021, the capacity utilization rate is only 26%.
On the other hand, Dongfeng Yueda Kia divested the factory earlier. "Finance and Economics" Weekly learned that as early as 2020, the first factory of Dongfeng Yueda Kia was sold to Gaohe Automobile, a new car-making company.
The "cost performance" label that can't be torn off
The two Korean brands were once the most cost-effective choice for Chinese people when buying a car. Among the joint venture car brands, there has always been a "chain of contempt" of Ashkenazi, American, Japanese and Korean, of which Korean is at the end. In the weak years of geely, Great Wall, Chang'an and other independent brands, among the competitors of the same level, Korean brand passenger cars were often priced 30,000 to 50,000 yuan lower than those of German and American.
As a result, Beijing Hyundai was the fastest to enter the "Millions Club" of joint venture car companies, entering the Chinese market in 2002 as a joint venture, and annual sales exceeded 1 million in 2013. In the following four years, Beijing Hyundai's annual sales were more than one million vehicles, ranking fourth in the sales volume of domestic automobile companies.
"Korean cars have always been in the middle and low price range, with joint venture brands such as Japanese and German brands upwards and independent brands downwards." Zhong Shi, a senior auto analyst, told Caijing Tianxia Weekly that in the first decade of The rapid start of China's auto market, due to the few competitors in the price range, relying on the "cost performance" advantage, Korean cars ran out of the "modern speed" that the industry envied.
Interestingly, now within the Korean joint venture automobile company, the "cost performance" of Korean cars has once become a sensitive word.
"In the report document to the high-level, the three words of cost performance cannot appear." The above-mentioned sources told the "Finance and Economics World" weekly that the use of "quality-price ratio" instead of "cost performance" in the report has become an unwritten rule of the company.
In 2016, when sales peaked, beijing hyundai's hot models were almost all compact products, with monthly sales of 30,000 vehicles.
However, with the exploration of independent brands and the reduction of the price of joint venture brands, the market space on which Korean cars rely for a living has been directly squeezed. The once cost-effective advantage has become a label that cannot be shaken off overnight.
According to the latest data from the China Automobile Association, in 2021, the market share of passenger cars of Korean brands will drop to 2.4%. In contrast, the market share of self-owned brands rose to 44.4% from 38.4% in the same period last year.
Back on the track, tearing off the "value for money" label is a key step. In the automotive market, another interpretation of "cost performance" is that the brand is weak and relies on price competition.
Under the pressure of sales waterloo, Fan Jingtao, then deputy general manager of Beijing Hyundai and head of the copy department of the sales headquarters, once said that Beijing Hyundai should abandon the market style of blindly emphasizing cost performance in the past, and emphasize performance and technology in the brand, "Hyundai's technical strength is underestimated in China." ”
In 2020, Beijing Hyundai introduced Hyundai's latest generation fuel technology platform, i-GMP, to the Chinese market. Based on this platform, Beijing Hyundai has successively launched the 10th generation Sonata B-Class sedan, the 7th generation Elantra and the 5th generation Tucs L of the mid-level SUV, making efforts to the mid-to-high-end market from the product. Fan Jingtao hopes that with the help of new products and technologies, it is possible to "eliminate the unreal perception of Beijing Hyundai and Hyundai cars by Chinese consumers." ”
But consumers don't buy it. "The publicity cost of the fifth-generation Tucson L reached the level of 100 million yuan, which was the heaviest model last year," a Beijing Hyundai insider told Caijing Tianxia Weekly, although resources have been tilted to it, but the mid-size SUV does not have a splash on the market side. "Consumers still can't accept this price point, but the seventh generation of Elantra, which does not have much publicity cost, has a mature market acceptance, and the market reacts immediately after the launch."
In Beijing Hyundai's public 2021 sales results, the overall sales of the fifth-generation Tucson L are not mentioned. Also as a mid-to-high-end layout of the tenth generation Sonata, since the mid-2020 listing, monthly sales have climbed to more than 3600 vehicles, since then sales have declined all the way, the boost is weak.
In this regard, Du Junbao also admitted that the effort of the Tucson L model is not proportional to the return. In his view, the lack of a one-step sales policy and the deviation of the price from the market were the main reasons for the failure of the Tucson L market.
"We have very high expectations for it across the company, but we don't really understand the market, we don't understand the mentality of consumers."
After the product breakthrough failed, Hyundai Began to try to launch a new brand.
In the face of the urgent need to reorganize the brand image in China, Hyundai Motor also directly put down the fire, and reintroduced the high-end car brand Genisais into the Chinese market.
The predecessor of The Genises was Hyundai's high-end model Genesis, which was once sold in China in the form of imported cars. In 2016, as Hyundai Motor stopped in the import car business in China due to poor management, Genesis also withdrew from the Chinese market.
Industry insiders believe that Genises' entry into the Chinese market is aimed at China's booming luxury car segment, and more importantly, it reshapes the brand image of Hyundai Motors in China with the help of Genisais. "Hyundai has elevated Genesis to a high-end brand, just as Lexus has done to Toyota, with the intention of improving brand recognition and increasing brand premium."
But Denises had a hard time carrying the heavy lifting. After experiencing the hustle and bustle of the initial listing, Genises has been in the Chinese market for less than a year.
Up to now, Genises has successively released three products: G80, GV80 and G70. "Finance and Economics" weekly flipped through the data and found that in the past 10 months, Genises has only laid out two directly operated stores, with cumulative sales of less than 100 vehicles.
In fact, Hyundai Motor basically adopts the cost-effective advantage in the global market, and has a good market performance in North America and Europe." In the view of Zhong Shi, an analyst in the automotive industry, there is no company in China at this stage, which can compare with the experience and global operation ability of Korean cars in cost-effective control.
The industry also generally believes that Korean cars do not lack technical reserves and strength. "In the field of fuel vehicles, Hyundai Motor has a perfect R&D system, including a vehicle manufacturing platform, a comprehensive engine sequence, a gearbox sequence, and a chassis process."
"The problem is that these technologies have not been empowered to specific products", Zhong Shi believes that Beijing Hyundai has launched a number of products in recent years, but there has been no obvious breakthrough in the product strength level.
Today, the only model that Beijing Hyundai can come up with is the compact sedan, the seventh generation Elantra. It has contributed 130,000 units in the past year, accounting for one-third of Beijing Hyundai's overall sales. But even so, Elantra, which sells more than 10,000 a month, still can't enter the top 15 in the sales ranking of the car segment.
Korean cars "overturned", is there still a chance?
With the rise of independent brands, the exploration of mainstream joint venture brands, and the transformation and upgrading of the automotive industry, a number of joint venture car companies have reached the edge of the industry. Some people are worried about whether Korean cars will also lose the Chinese market.
This is clearly unacceptable to Hyundai Motor Group.
Since 2015, Hyundai Motor Group's global sales have been in a state of continuous decline. As of 2021, Hyundai motor has not achieved its annual sales target for seven consecutive years. If we want to return to the peak, Hyundai Motor cannot lack the important territory of the Chinese market. After all, in 2016, when The Korean joint venture car companies were at their peak, Beijing Hyundai and Dongfeng Yueda Kia contributed about 1/4 of the global sales volume of Hyundai Motor Group.
In addition, China, as the world's most active new energy vehicle market, also cannot be abandoned for Hyundai Automobile, which is accelerating its electrification transformation.
Some industry insiders believe that in the fuel vehicle segment, the Korean car companies represented by Beijing Hyundai have lost their right to speak, and whether they can seize the opportunity in the era of intelligent electrification is the key to whether the Korean car can achieve "turnover".
On March 2, Hyundai Motor released a new electrification strategic plan, planning to launch 17 pure electric models by 2030, including 11 models under Hyundai Motor and 6 models under Genisys. To this end, Hyundai Motor will invest 95.5 trillion won (about 496.74 billion yuan) by 2030.
According to the plan, Beijing Hyundai will launch a new electric model with the internal code name "OE" in mid-2023, and a second electric model codenamed "CJ" by the end of 2023 or early 2024. Hyundai motor will start selling the IONIQ 6 this year and will introduce it to the Chinese market when it is promoted globally. This means that beijing hyundai's first electric vehicle based on the pure electric platform must wait until the next year to be introduced.
In fact, in order to maintain China's market share, Hyundai Motor has adjusted its strategy in China from the group headquarters level to enhance the importance of the Chinese market.
In April 2021, Hyundai Kia Motors Group announced a new strategy of "Leaping Forward and More China", saying that it will carry out local research and development, electrification process, hydrogen fuel cell technology layout and transformation and upgrading of joint venture brands in the Chinese market. The Chinese market has become one of the main carriers for the transformation of modern electrification.
In fact, as early as 2016, Beijing Hyundai released the new energy strategy "NEW Plan", and since then launched a number of pure electric models. However, the above models are all oil to electricity, that is, based on the fuel version of the model for transformation, rather than by the exclusive pure electric platform to create. Compared with the latter, oil-to-electricity models often have obvious deficiencies in mileage and use space.
"China's auto market has experienced a wave of knockout races for joint venture car companies, and now the second round of competition is to compete for intelligent electrification." Zhong Shi believes that it is too early to judge the pattern of the electrification market, but compared with industry rivals, the electrification process of Korean brands has lagged behind one position.
In the eyes of industry insiders, compared with the late electrification products, for Korean joint venture car companies, it is more important to survive in the new year.
Du Junbao also said in an interview with the media that in 2022, the primary task of Beijing Hyundai is still to achieve model profitability, to truly change the operating conditions of Beijing Hyundai, "to achieve that each product can bring benefits, can cover the expenditure of cash flow, which is the core." ”
Du Junbao said that the overall sales data of Beijing Hyundai last year was not ideal, because the company adjusted its core strategy, from simply focusing on sales increase to optimizing product structure, enhancing technical influence and improving the dealer system.
"2021 is a very painful year, and the results of our efforts will be reflected in 2022 and 2023."