AutoBeta(AutoBeta.net)12/10 Report--

Kia's sales in China continue to be low, and the joint venture has fallen into the plight of insolvency. By the end of the third quarter, Jiangsu Yueda Kia Automobile Co., Ltd., a joint venture in China, had total liabilities of 227.92 million won (about 12.2 billion yuan) and total assets of 212.4 million won (11.3 billion yuan), according to the third-quarter results released by South Korea's Kia Company. According to this calculation, Jiangsu Yueda Kia is insolvent, with an asset-liability ratio of 107.3%. Beijing Bowo, which previously declared bankruptcy, has a debt ratio of 133.5%, while Guangqi Fick, which has just been accepted by the court for bankruptcy liquidation, has a debt ratio of 110.8%.

According to the number of new car compulsory insurance purchases, Jiangsu Yueda Kia sold 5699 vehicles in October 2022, down 15.73% from 6763 in September and 57.95% from 13557 in October 2021. In addition, Yueda Kia sold a total of 78462 vehicles from January to October 2022, down 41.13% from the same period last year. This level of sales can not even be compared with the new power of mainstream car-building in China, and Kia is one of the first multinational automobile giants to enter China.

As one of the earliest multinational car companies to enter China, its market sales have been growing steadily since 2006. It has won the popularity of many consumers for its pragmatic appearance and high performance-to-price ratio, and reached an annual sales peak of 650000 vehicles in 2016. Since then, with the impact of the THAAD incident and the upward breakthrough of its own brands, Kia's market position has been gradually marginalized, falling from 360000 in 2017 to 160000 in 2021 and nearly halving in 2022.

In the face of persistent losses, Dongfeng Motor, a former partner, officially withdrew in January this year and sold its 25 per cent stake in Dongfeng Yueda Kia for 297 million yuan. Dongfeng Yueda Kia, which has been operating in the Chinese market for nearly 20 years, announced its delisting. It was later renamed Jiangsu Yueda Kia Automobile Co., Ltd.

Unlike the Chinese market, Kia is outstanding in the global market. According to the data, a total of 252800 vehicles have been sold worldwide since November 2022, an increase of 15.0 per cent over the same period last year, including 13.4 per cent in South Korea and 15.4 per cent in overseas markets. Although Kia has good technology reserves, there are neither major breakthroughs nor bright spots in the technology delivery of products put into the Chinese market in recent years.

Despite the obvious disadvantages in the domestic market, Kia still did not give up to save itself, but with little success. In March 2021, Hyundai Motor Group (China) issued an personnel announcement showing that Liu Changyi took over the position of general manager of Dongfeng Yueda Kia, and Li Feng, former general manager of Dongfeng Yueda Kia, was transferred back to Hyundai Motor Group (China) as vice president. In April 2021, Dongfeng Yueda Kia released a new brand logo, launched "brand reshaping" and announced the new brand concept of "customer-centered", firing the first shot of "brand reshaping".

After the change, Kia launched three new cars in China, namely, the Ace, which was launched in July 2021, Jiahua, which was launched in September, and the Lion Platinum extension, which was launched in November 2022.

The Ace is a medium-term revamped model for Kia, which is sold only in the Chinese market and offers 1.5T turbocharging and 2.0T naturally aspirated power systems at a price of 13.98-157800 yuan. Kia Jiahua introduced domestic products in 2004, but soon announced that it would stop production. Kia reintroduced Jiahua, becoming the first global model to be introduced after the brand renovated, with a price of 28.89-339900 yuan. According to the insurance figures, Zhirun's cumulative sales from January to October in 2022 were 16507, down 53.22% from the same period last year. Jiahua is even more bleak, with cumulative sales of 2325 vehicles in the first 10 months, with an average monthly sales of just over 200 units.

As for Lion Platinum to expand the boundary, it can be regarded as a replacement model of Kia KX5. Sportage is no stranger to the Chinese market. Its second, third and fourth generation models have been sold in the Chinese market under the names of Lion run, Zhi run and KX5, respectively. This time, in order to "be closer to globalization and de-Sinicization", Kia no longer has a catchy name for "Sportage" from the perspective of Chinese aesthetics, but is directly transliterated from Sportage. This is the only domestic model in Kia that uses four-character naming, with a long and mouthful product name.

It is understood that the Lion Platinum extension launched 1.5T+8AT, 2.0T+8AT, 2.0L HEV+6AT three power options, the price range of 17.98-240800 yuan, this is the Sportage since the domestic price of the highest generation of models. For comparison, the RAV4 Rongfang guidance price is 175800-260800 yuan, and the Honda CR-V guidance price is 16.98-276800 yuan.

Although it belongs to the same class, the brand value of Kia in China is far less than that of "Liangtian" and far less than that of Hyundai. Therefore, in the perception of Chinese consumers, there is no matching brand awareness while raising the price of products, which further verifies Kia's anxious mentality of trying to enhance brand power by pulling seedlings to encourage it, which is undoubtedly drinking poison to quench thirst.

In fact, since Dongfeng announced its official withdrawal from Dongfeng Yueda Kia, Kia has also begun its own "reform". Kia has previously said that after the establishment of a new joint venture between Kia and Jiangsu Yueda Group, Kia will expand its investment to introduce more global models and new energy models, while Kia will gradually stop producing models of less than 100000 yuan. According to the plan, in addition to the introduction of HEV hybrid models in Asia this year, the pure electric model EV6 will also be introduced into China soon. In addition, Kia launches new electric models in the domestic market every year, gradually building a new EV matrix for six electric vehicles. According to the latest plan released by Kia, Kia's new energy vehicles will account for 52% of its total global sales, up from 17% in 2022, when Kia will also focus on pure electricity or new energy models.

It is worth mentioning that Kia is considering investing 1 trillion won ($754 million) in China to adjust its production facilities in China to produce cars for other markets such as Southeast Asia and the Middle East. Kia originally planned to use the money for the Russian market, but Kia changed its investment plan because sales of its Chinese subsidiaries have been declining in the local market, the report said.

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