The Dongfeng and KIA relationship is not working in China. Both manufacturers maintain a joint venture. However, the poor economic results have led Dongfeng to want to ditch its stake. A stake valued at around 40 million euros and which, predictably, will go to the South Korean firm.
Dongfeng It is one of the colossi of the Chinese automotive industry. A giant that is present in the Spanish market through its DFSK brand. In China, it maintains important relationships with foreign manufacturers that want to operate in the country. KIA is one of the brands that is present in the Chinese territory through a joint venture with Dongfeng. Unfortunately, this relationship seems not to go through its best moment.
The information made public by a specialized medium indicates that Dongfeng Motor Group wants to sell its stake in its joint venture with KIA. A participation that reaches 25%. The poor financial results obtained are a heavy burden that Dongfeng wants to get rid of. The joint venture being targeted is Dongfeng Yueda Kia.
Dongfeng wants to break with KIA in China
Dongfeng’s stake in its joint venture with KIA has been valued at around € 40 million. Although it remains to be seen in which hands this important percentage will land, some reports indicate that it is very possible that KIA itself will take control of it, which will allow it to increase its control over the company with the ultimate goal of having 75% of the shares .
It is important to note that, as its name suggests, this company is also owned by Yueda. Therefore, and with the departure of Dongfeng, there will only be two entities as administrators.
Dongfeng Yueda Kia was established in the year 1992 in Yancheng, Jiangsu province. This company has been in charge of the production and marketing of KIA brand models in the Chinese market.
KIA sales in China
How are things going for KIA in China? So far this year, that is, in the period between January and October 2021, KIA’s sales in the Chinese market have accumulated a total of 125,251 registered units. A volume that represents a drop of 30.40% when compared with the data obtained in the same period last year.
The The brand’s best-selling model in China is the KIA Sportage with 26,010 units, 49.80% less than in 2020. However, the Sportage available in Chinese dealerships is nothing like the model that we can find in this part of the world.
If we take into account that the turbulent year 2020 was marked by the coronavirus pandemic with the consequent closures of commercial activity in the Asian country, the KIA registration data is even more worrying. Therefore, it should come as no surprise that Dongfeng wants to step aside.