AutoBeta(AutoBeta.net)06/17 Report--

At the 15th China Auto Blue Book Forum, Yang Honghai, chief operating officer (COO) of Kia China, once again aroused widespread attention and heated discussion in the automobile circle. Yang Honghai said in public that the technology accumulation, talent accumulation and globalization experience of joint venture automobile enterprises, including global profits, are far greater than those of local enterprises. Yang Honghai bluntly said: "I earned 2.1 billion US dollars globally in the first quarter of this year, and I can afford to stick to the Chinese market. Do you have the financial strength to play with these local enterprises?" You burn to death first, I wait later to come in and grab the market. Let the enemy try to hurt first, I have money in my pocket, it is all technology, I have not given up this market, at the right time to come in and clean up you is also a strategy."

It should be noted that this is not the first time Yang Honghai has expressed such a view. On March 20 this year, Kia China officially announced its blueprint for accelerating the transition to electrification and released China's medium-and long-term new energy strategy. Yang Honghai said in an interview: Although Kia does not have much sales in the domestic new energy market at present, relying on Kia's global strength, we can wait for other families to compete, and we will clean up the battlefield.

According to the data, Yang Honghai is a veteran of automobile circle marketing operation. He has successively served as director of SAIC Chase Brand and Network Department, marketing director, deputy general manager of MPV Business Department, deputy general manager of SAIC Indonesia Company, etc. In April 2020, Yang Honghai joined Brilliance Renault Jinbei as vice president of the company, fully responsible for the marketing work of Brilliance Renault Jinbei. However, with the bankruptcy reorganization of Brilliance Renault Jinbei, Yang Honghai gradually faded out of sight. Until February of this year, Yang Honghai, who disappeared, returned to the public eye as chief operating officer (COO) of Kia China and was once again on the front line of car marketing.

According to the data, Hyundai Kia became the third largest automobile group in the world with a total sales volume of 6.848 million vehicles in 2022, second only to Toyota and Volkswagen. Among them, Kia's global sales volume was 2.9036 million vehicles, up 4.6% year-on-year, ranking seventh in the global automobile brand sales list. The financial report shows that Kia's annual revenue in 2022 was 86.56 trillion won (about 475.6 billion yuan), up 23.9% year-on-year, and net profit was 5.41 trillion won (about 29.72 billion yuan), up 13.6% year-on-year. The overall performance was really good.

However, in terms of segmentation into the Chinese market, Kia is very lonely in the Chinese market compared to its global business. Kia sold 94345 vehicles in China in 2022, down 40.5% year-on-year, far from its peak sales of 650,000 vehicles in China in 2016, according to the number of risks. More difficult is that sales decline at the same time, Kia in China also appeared insolvency dilemma.

As of December 31,2022, Kia's joint venture in China, Jiangsu Yueda Kia Automobile Co., Ltd., had total liabilities of 2476.8 billion won (about 13 billion yuan) and total assets of 2080.9 billion won (about 10.9 billion yuan), according to the financial report. According to this calculation, Jiangsu Yueda Kia has fallen into insolvency, with an asset-liability ratio of 119.3%.

It should be noted that although Kia's sales in the Chinese market are sluggish, Kia has repeatedly stressed that it will not give up the Chinese market. During the 2023 Shanghai Auto Show, Yang Honghai made it clear that Kia's development in China has indeed encountered challenges in the past few years, but Kia's determination to deepen the Chinese market will not waver. At present, Kia is pooling global resources and increasing investment in the Chinese market.

Today, China has become the world's largest single automobile consumer market and one of the most competitive automobile markets. The importance of the Chinese market for joint venture automobile enterprises is self-evident. In response to the subsequent performance of joint venture car companies in the Chinese market, Yang Honghai said: "Joint venture brands will die out in China or only account for a possible 10% or even lower share, I personally feel that it is not." In his opinion, the Chinese market is very open and inclusive, and everyone has different preferences, such as Japanese, American, Korean, including legal systems, all of which will have fans. The difference lies only in the quantity.

However, the industry believes that the presence of Korean brands in the domestic market is far less than that of German and Japanese brands, and the reason why Kia's sales in China have not improved is related to the decline of its product brand power and the slow transformation of electrification. According to the plan, Kia will launch at least one pure electric vehicle based on the electric global modular platform E-GMP every year from 2023; by 2027, a total of six EV models will be launched; by 2030, the annual sales volume of EV models will reach 180,000, accounting for 40%. In other words, new energy vehicles will become a stepping stone for Kia to open up the Chinese market, but according to the plan, Kia's first global model produced in China and launched in November this year, and since 2023, the competition in China's auto market has become increasingly fierce, especially in the new energy vehicle market. Under this background, Kia is under great pressure in China.

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