AutoBeta(AutoBeta.net)11/05 Report--

According to China Business report, a person close to Dongfeng Motor Group Co., Ltd. said that Dongfeng Motor will be listed on the property exchange to transfer its 25% stake in Dongfeng Yueda Kia as soon as November. "the negotiations started in the middle of this year, and Kia, Yueda and Dongfeng Motor re-evaluated the cooperation," a person familiar with the matter said. "the Asian side wanted to expand the share ratio, Dongfeng Motor felt that it was not making money, and the three parties quickly reached an agreement."

According to the data, Dongfeng Yueda Kia Automobile Co., Ltd. was established in 2002 and is jointly established by Dongfeng Motor Company, Jiangsu Yueda Investment Co., Ltd., and Kia Automotive Co., Ltd., Korea. The shares of the three parties are 25%, 25% and 50% respectively. The operating life is from September 12, 1992 to September 11, 2022.

In response to market reports, Dongfeng Yueda Kia said it would not comment and had not been officially confirmed by Dongfeng Motor.

Judging from the current market situation, Dongfeng Yueda Kia's performance is really not good. Before 2015, Dongfeng Yueda Kia developed rapidly, reaching an annual sales peak of 650000 vehicles by 2016. However, after entering 2017, Dongfeng Yueda Kia sales began to decline sharply, with sales of only 359500 vehicles in 2017, rebounding slightly to 370000 in 2018, falling back into the doldrums again in 2019 and falling to 249000 in 2020 because of the epidemic.

In order to restore the market image, Dongfeng Yueda Kia released a new brand logo, the first of which uses the new Kia brand logo as a medium-term revamped Kia Smart run Ace. In addition, Dongfeng Yueda Kia also launched a new generation of K5 Kaiku and reintroduced the fourth generation of Jiahua into domestic sales to reverse the situation. However, data show that Dongfeng Yueda Kia sold only 13234 vehicles in September and less than 120000 new cars in the first three quarters. With the decline in sales, Dongfeng Yueda Kia has a large surplus of production capacity in China, resulting in continuous operating losses. According to the 2020 financial report of Yueda Investment, the performance of Dongfeng Yueda Kia, which has a 25% stake, fell sharply in 2020, with a net profit of-1.188 billion yuan belonging to a listed company, an increase of 863 million yuan compared with the same period last year.

At present, Dongfeng has joint venture brands such as Dongfeng Honda, Dongfeng Nissan, Dragon Motor, Dongfeng Yueda Kia and other joint ventures, but except for Dongfeng Honda and Dongfeng Nissan, the performance of other brands in the market is not optimistic. There is a view that Dongfeng Motor is eager to divest non-performing assets, on the one hand, it is unable to control Dongfeng Yueda Kia because of its lower shareholding, and it is not confident enough about whether Dongfeng Yueda Kia can turn the corner in the future. on the other hand, it is due to the planning of Dongfeng Motor's independent plate.

In the face of Dongfeng Yueda Kia's continuous malaise for many years, if Dongfeng Motors abandons its stock ratio, it is actually easy to understand that instead of guarding the increasingly depressed market, it is better to project more resources and energy to its own brand and products with more development potential and better efficiency, which is more in line with Dongfeng Motor's long-term strategy and planning goals.

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