AutoBeta(AutoBeta.net)06/28 Report--

On June 17, Dongfeng Yueda Kia, Yueda Group and Chinese Express announced that the first model of Chinese Express will be produced at Dongfeng Kia production base and is expected to be put into mass production in 2021. But before the cooperation, it was reported that the first project of Dongfeng Kia would stop production at the end of this month. In this regard, the relevant person in charge said that the first factory in Ulai will serve as a base for the production of products by Chinese Express, and then the factory will be upgraded to meet the demand for new cars, and the upgrading is expected to be completed in the first half of 2021.

Dongfeng Yueda Kia annual sales fell from 600000 to 300000 vehicles, production capacity has been greatly reduced, excess capacity must be eliminated.

Data show that Dongfeng Yueda Kia first factory was established in 2002, is its first factory in China, covering a total area of 450000 square meters, annual production capacity of 150000 vehicles.

Jia Xinguang, an automobile industry analyst, said that the equipment and technology of the first factory are relatively backward, so it is more appropriate to sublease it to Chinese Express. On the one hand, the production of Chinese transport capacity is just around the corner, and we need to find a production base as soon as possible, while Dongfeng Yueda Kia can solve the problem of idle capacity while charging rental fees.

Due to the continuous decline in sales, the current idle capacity is indeed very serious. The second and third factories have a designed annual production capacity of 300000 vehicles and 450000 vehicles respectively. Together with the first factory, the total annual production capacity is 900000 vehicles. According to the national passenger car market information association, Dongfeng Yueda Kia sold about 370000 vehicles and produced 362000 vehicles in 2018, which means that Dongfeng Yueda Kia's current capacity utilization is only about 40 per cent.

In the following two years, Dongfeng Yueda Kia's sales growth began to slow down, always hovering at the gate of 650000 vehicles. Finally, the problem began to break out in 2017. As sales growth slows, relations between some dealers and car companies have become strained.

In 2018, Dongfeng Yueda Kia accumulated sales of more than 50, 000 vehicles, a total of K3, KX CROSS, Zhirun three models, the price range is mainly in the 90, 000-150000 yuan, all medium-and low-end models. Sales of high-end products aimed at more than 150000 yuan are dismal. For example, KX5 with a price range of 150000-170000 yuan sold only 5951 vehicles last year, down about 70% from the same period last year; KX7, with a price range of 180000-280000 yuan, sold only 2017 vehicles last year, down 66% from the same period last year. High-end cars can not sell, medium-and low-end models can not support sales, in the end, excess capacity can only be turned into idle heavy assets.

In Jia Xinguang's view, Dongfeng Yueda Kia is a three-way joint venture, but it is Kia and Dongfeng that can really bring adjustment. At present, the cooperative relationship between the two sides does not seem to be very harmonious, the confidence in the joint venture company is not enough, and it does not provide enough support, which is very disadvantageous to the future development of Dongfeng Yueda Kia.

Data show that Dongfeng Yueda Kia's sales plunged by 290000 vehicles in 2017, directly causing Kia's global sales to fall below 3 million, a decline of about 8.6%, the biggest decline in recent years. Although sub-global sales have picked up slightly since 2018, up 2.4%, they have not returned to the annual sales level of 3 million vehicles.

In the face of the current unfavorable situation, Dongfeng Yueda Kia is actually adjusting. At the product level, Dongfeng Yueda Kia plans to launch five new models, including the new KX5 and the new K3, this year, hoping to drive overall sales growth with new products. In terms of sales targets, Dongfeng Yueda Kia has also made a corresponding reduction, with plans to sell 410000 vehicles for the whole year, 90, 000 fewer than the target of 500000 in 2018.

From January to May this year, Dongfeng Yueda Kia sold a total of 128700 vehicles, down 11.4% from the same period last year, and only achieved the sales target of about 31%. According to the current situation, Dongfeng Yueda Kia may not be able to meet this year's sales target by the end of the year.

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