Car Review Observation, Car Review Agency, No. 539
Foreword: Entering 2022, the liberalization of the joint venture equity ratio has become a landmark node, and the reform of the automobile industry has boosted the accelerated restructuring of the equity of the joint venture company. So, in the post-joint venture era, is the spring of autonomy coming?
1
An era is over
Recently, the news that Dongfeng Yueda Kia Automobile Co., Ltd. (hereinafter referred to as Company), one of the representative car companies of the Korean family, officially changed its name to Kia Automobile Co., Ltd. burst the circle of friends. Although this is not a "new" news, but with the dust settled on this matter, it represents the official end of an era.
Time back to March 29, 2002, Dongfeng, Yueda, Kia held a joint venture contract and company charter signing ceremony in Nanjing, Jiangsu Province, the final positioning of Dongfeng, Yueda each held 25%, Kia held 50%, and opened a 20-year joint venture development road.
Although Dongfeng Yueda Kia is not the best joint venture car company, as the first Sino-foreign automobile joint venture project after China's accession to the WTO, it is definitely one of the representatives of that era.
In terms of products, Dongfeng Yueda Kia has launched China-specific products that are more in line with domestic consumer demand. For example, the 2007 Lion Run, the 2010 Smart Run and the K series such as K5, K2, K3 and K4 launched in 2011;
After 2015, three SUV models were launched consecutively, KX3, KX5 and KX7, and Kia, which focuses on the home market, has won the favor of many consumers with its pragmatic appearance and high cost performance.
In terms of sales, Dongfeng Yueda Kia has experienced a rise in development. From a car company with a production capacity of only 50,000 vehicles at the beginning to a joint venture with 5 million vehicles off the production line, it took only 16 years, especially in 2016, to reach a peak of 650,000 vehicles.
However, with the change of the general environment in 2017, the sales of Korean car companies in China have been seriously frustrated, mainstream joint venture car companies have also begun to explore the market, and the main cost-effective Korean brand living space has been suppressed, and the market share has been divided, from 360,000 in 2017 to 250,000 in 2020, to only 160,000 in 2021, and the number of insurance companies in in January 2022 is only 6,030.
Affected by sales, Dongfeng Yueda Kia's financial report is not so good.
According to public information, from 2017 to 2020, the net profit attributable to Dongfeng Yueda Kia was -1.123 billion yuan, -492 million yuan, -1.299 billion yuan and -4.750 billion yuan, respectively, plus the net profit of -1.715 billion yuan in the first three quarters of 2021, and the cumulative loss of DAYK company in four and a half years was 9.035 billion yuan.
In the view of Dongfeng at that time, the investment of Dongfeng Yueda Kia in the domestic market has become a "non-performing asset", coupled with consecutive years of losses in performance, so it finally decided to sell.
After a series of discussions, listings, transactions and changes between the three parties, the scene at the beginning of the article appeared.
2
The post-joint venture era began
At present, although Yueda has not withdrawn, at the beginning of the month, Yueda Investment issued the "Announcement on Giving Up Participation in the Capital Increase and Related Party Transactions of participating companies", the company has given up participating in the capital increase of Dongfeng Yueda Kia, and after the capital increase of other shareholders, the share ratio of Yueda Investment will be reduced from 25% to 4.2%, that is to say, the current Dongfeng Yueda Kia is actually completely dominated by the Korean side, so this name change is actually not surprising at all.
First of all, for Dongfeng, abandoning Dongfeng Yueda Kia's position is also a wise choice. Because its Dongfeng Nissan and Dongfeng Honda, on product and brand strength, are much stronger than Sub-strength.
In addition, in the new round of scientific and technological revolution and industrial change, independent brands have gradually gained the upper hand. Dongfeng also took advantage of the situation and shifted its strategic focus to "electrification and intelligence". At present, Dongfeng Motor has opened a blueprint strategy in the new energy market, and its high-end brand Lantu has become one of the benchmarks of new domestic products in the domestic market.
Combined with the previous state's policy of "adjusting the restrictions on the equity ratio of joint venture car companies and abolishing the restrictions on the foreign ownership ratio of passenger cars in 2022", the market generally believes that Dongfeng's withdrawal at this juncture is a "stop loss". Last year, Dongfeng Motor released the "14th Five-Year Plan", the overall scale of independent passenger cars should exceed 1 million, and the group will focus on its own brands.
For Dongfeng Motor, bidding farewell to Dongfeng Yueda Kia may be able to invest more resources and energy in products with more development potential and better benefits, so as to achieve longer-term goals.
Of course, Kia's changes are not small, not only with a new brand LOGO, but also with a new name. According to media reports, Kia will accelerate the introduction of more competitive global models in order to enhance its brand image, and gradually discontinue production of models below 100,000 yuan. It is understood that Dongfeng Yueda Kia is currently selling less than 100,000 yuan of models, including Yipao, Huanchi, Freddy three models.
For Kia, more controlling stakes are available, and decisions can be made in their own hands. From this point of view, Dongfeng's active withdrawal is not a rare opportunity for Kia to save itself.
Having said that, the original "joint venture" was required by the situation, and the current "breakup" is also reasonable. "Dongfeng Yueda Kia" will eventually become history, but whether it is for Dongfeng or Kia, it will be a good thing of "win-win", just as the so-called "one is different and two wide, each life is happy".
It should be pointed out that with the acceleration of industrial change, the adjustment of Chinese car companies' own strategies and the improvement of their strength have made their technical dependence on joint venture companies no longer as strong as before, and the "post-joint venture" era of China's auto market has begun, and the former Dongfeng Yueda Kia is definitely one of the most representative examples of the "post-joint venture era".
So, after Dongfeng Yueda Kia, who will be the next to "split the family"?
Talk about it in the next issue!
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