AutoBeta(AutoBeta.net)03/13 Report--

Kia's sales in China continue to be low, and the joint venture has fallen into the plight of insolvency.

According to the 2022 results released by South Korea's Kia Company, in the financial information of joint ventures and associated enterprises for the year ended December 31, Jiangsu Yueda Kia Automobile Co., Ltd., a joint venture in China, has total liabilities of 2.4768 trillion won (about 13 billion yuan) and assets of 2.0809 trillion won (about 10.9 billion yuan). According to this calculation, Jiangsu Yueda Kia is insolvent, with an asset-liability ratio of 119.0%. Beijing Bowo, which previously declared bankruptcy, has a debt ratio of 133.5%, while Guangqi Fick, which is in bankruptcy liquidation, is 110.8%.

According to the number of new car compulsory insurance purchases, Asia's sales in China have been 94345 since 2022, down 40.5 per cent from a year earlier, with the Freddy having the highest sales, up 4.2 per cent to 19758 from a year earlier, mainly because it is a model priced at less than 100000 yuan. According to Kia's plan, it will stop producing models with less than 100000 yuan one after another. At present, Freddy can no longer be found on Kia's official website.

Recalling the "marriage" between Dongfeng and Kia for nearly 20 years, there was also a magnificent beauty.

On August 18, 2002, Dongfeng Yueda Kia Automobile Co., Ltd., jointly established by Dongfeng Automobile Group, Jiangsu Yueda Group and Kia Automobile, was officially established. Kia Automobile, Dongfeng Automobile Group and Jiangsu Yueda accounted for 50%, 25% and 25% respectively. Three months later, Dongfeng Yueda Kia's first new car, Chollima, went off the production line in Yancheng, with 1.3L and 1.6L engines to choose from. "Chollima" has a great price advantage in the market, once known as the sales myth of family economy cars, hit 50,000 sales in just one year on the market, and became the "dark horse" of the Chinese car market.

Since the listing of "Chollima", Dongfeng Yueda Kia has been growing by leaps and bounds, and its market sales have been growing steadily since 2006. It has been sought after by many consumers for its pragmatic appearance and cost-effective, and reached an annual sales peak of 650000 vehicles in 2016. This has also made Dongfeng Yueda Kia a lot of money. In 2015 and 2016, Dongfeng Yueda Kia's revenue was 63.354 billion yuan and 66.998 billion yuan respectively, and its net profit was 1.02 billion yuan and 1.493 billion yuan respectively.

In February 2017, Su Nanyong, then general manager of Dongfeng Yueda Kia, was full of confidence and proposed to lead Dongfeng Yueda Kia to implement the "New DYK 2020" strategy, achieving the sales target of 700000 vehicles by 2017 and 1 million vehicles by 2020. However, Su Nanyong must not have expected it at that time, and it was from this year that Dongfeng Yueda Kia began to experience a sales Waterloo, and finally there was no more Dongfeng Yueda Kia in China.

In 2017, Dongfeng Yueda Kia sold 359500 vehicles, down 45 per cent from the same period last year and achieving only 51 per cent of its annual sales target of 700000 vehicles. By 2021, Dongfeng Yueda Kia will sell only 163400 vehicles for the whole year. Auto Industry concern learned from the information disclosed by Jiangsu Yueda Investment Co., Ltd. (hereinafter referred to as "Yueda Investment") that the net profits of Dongfeng Yueda Kia from 2017 to 2021 were-1.123 billion yuan,-492 million yuan,-1.299 billion yuan,-4.75 billion yuan and-2.612 billion yuan, respectively. DYK lost 10.276 billion yuan in four and a half years.

In the face of continuing losses, Dongfeng Motor, a former partner, was listed to sell 25 per cent of Dongfeng Yueda Kia (DYK) in November 2021, with Jiangsu Yueda Automobile Group Co., Ltd. as the sole bidder. With the completion of the sale of Dongfeng Yueda Kia shares, Dongfeng Motor Group withdrew completely. Dongfeng Yueda Kia, which has been operating in the Chinese market for nearly 20 years, changed its name to Jiangsu Yueda Kia Automobile Co., Ltd., and Kia became the absolute controlling shareholder.

Kia, which has lost the east wind, is no better. After the renaming of Jiangsu Yueda Kia, the wholesale sales of Jiangsu Yueda Kia in 2022 were 129897 vehicles, down 20.35% from the same period last year.

In November 2022, Kia Lion Platinum went on sale, and the new car was positioned as a compact SUV with a price range of 17.98-240800 yuan, which is the most expensive generation of Sportage models since it was made in China. In terms of power, Lion Platinum extension provides three power options: 1.5T+8AT, 2.0T+8AT and 2.0L HEV+6AT.

Lion Platinum expands the boundary, which can be regarded as the 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. In a sense, Lion Platinum Toujie is the first model launched by Jiangsu Yueda Kia.

Lion Platinum's competition is aimed directly at Honda CR-V, Toyota RAV4 and other models, but Kia's brand value in China is far less than that of "Liangda". 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. According to the retail data of the Federation of passengers, since its listing in October 2022, Lion Platinum's sales have basically remained in the triple digits, with a cumulative sales of 1242 vehicles until January 2023. The market performance is not objective.

In February 2023, the new Kia K3 officially went on sale with a price range of 11.29-143900 yuan. As a medium-term revamped model, the new car is upgraded to varying degrees for appearance and interior, and the power still provides 1.5L and 1.4T engines. As a compact car, the direct competitors of the new K3 are Nissan Xuanyi, Toyota Corolla, Volkswagen Bora and so on. K3 sales in 2022 were 12700, compared with 420700 for Xuanyi, 351100 for Longyi and 249900 for Corolla, according to the Federation of passengers. Sales of the Kia K3 are a fraction of those of the above models.

Unlike the Chinese market, Kia is outstanding in the global market. In 2022, Hyundai Kia sold a total of 6.848 million vehicles, making it the third largest automobile group in the world after Toyota and Volkswagen, of which Kia sold 2.9036 million vehicles, up 4.6 per cent from the same period last year. Kia's annual revenue in 2022 was 8.656 billion won (475.6 billion yuan), up 23.9 percent from a year earlier, and its net profit was 541 million won (29.72 billion yuan), up 13.6 percent from a year earlier, according to the financial report.

South Korea's Kia has been in China for 20 years, from high speed to stall has witnessed the development of China's auto market, but with the intensification of competition in the future, Kia must regain the Chinese auto market. According to Kia's official account, the "2023 Asia China New Energy Strategy Conference" will be held on March 20, officially announcing Kia China's blueprint for accelerating its transformation to electrification. At the conference, Kia will unveil China's medium-and long-term new energy strategy, as well as three new electric models, the EV5 concept car, the EV9 concept car and the EV6GT.

The question is, from reaching the top of the Chinese auto market to no one is interested, can the stalled Kia regain the Chinese auto market?

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat