South Korea's Kia scales up investment in Chinese JV

Despite its lackluster performance, South Korean carmaker Kia has decided to give it another try in the world's largest vehicle market.

Kia and its Chinese partner Jiangsu Yueda Group announced on Monday that they would invest $900 million in their money-losing joint venture Dongfeng Yueda Kia.

Based in Yancheng, Jiangsu province, the company lost 4.75 billion yuan ($747 million) in 2020 and 2.61 billion yuan in the first 10 months of 2021, according to Shanghai United Assets and Equity Exchange.

Another partner, Dongfeng, dropped out of the partnership in January 2022 by selling its 25 percent stake to Yueda.

The two parents would rename the joint venture and make public their respective stakes in April around the Beijing auto show.

Kia, which is part of Hyundai Motor Group, said the new joint venture's goal is to sell 4 million vehicles in 10 years from now. Its cumulative sales in China stand around 6 million since its arrival in China in 2002.

Dongfeng Yueda Kia was one of the popular carmakers in China. Its models were more affordable than those from European and Japanese carmakers and have better quality than Chinese ones.

Its sales peaked in 2016 at around 650,000 units but the deliveries have since dwindled, falling to 160,000 units in 2021.

Analysts said that was because of local Chinese marques' growing competitive edge, other international carmakers' downward push and more importantly Kia's sitting on the laureate and slowness to introduce new models.

Kia said on Monday that it would step up efforts to introduce its global models, especially the electric vehicles, into China.

According to its strategy released in 2020, the South Korean carmaker plans to offer 11 EVs by 2025 and achieve a 6.6 percent market share of the global EV market by the same year.

The first of them will arrive in China in 2023 and six will be available by 2027, said the carmaker.

That would be fast compared with Kia itself in the past, but still slow if compared with other international volume carmakers, said analysts.

Volkswagen is selling in China five EVs built on its new platform. Honda is offering two from early 2022 and will have 10 in the Chinese market by 2026.

Kia said it will also put efforts into localizing its brand by hiring professional Chinese employees.

"We will transplant our global capabilities into China and rebound our Chinese business this year through efficient decision-making and substantial business promotion," said the company in a statement.

"In the future, we will seek the optimal governance structure for sustainable growth in the Chinese market," it said.

It is not the first time that Kia and its parent Hyundai have emphasized the importance of local Chinese professionals.

Three senior Chinese executives including Li Hongpeng, who had a pretty successful career at international carmakers, joined Kia and Hyundai in 2019 and 2020, but they left one after another because they did not have enough authority to help maneuver the companies' business in China, said analysts.

Kia sold 2.78 million vehicles across the world in 2021, a 6.5 percent increase year-on-year. It is targeting global sales of 3.5 million this year, but did not give goals by regions.

lifusheng@chinadaily.com.cn