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1. Flowers bloom inside the wall, and the fragrance spreads outside the wall

In the past June, Jiangsu Yueda Kia Automobile Co., Ltd. (referred to as "Yueda Kia") finally ushered in the long-awaited highlight.

In addition to the company's cumulative production and sales in the first half of this year, both increased significantly year-on-year, according to Kia's official Weibo, in June 2024 alone, Yueda Kia's sales reached 20,655 vehicles, a year-on-year increase of 32.7%.

You should know that this is the first time that the company's monthly sales have exceeded 20,000 vehicles since November 2020.

Although this achievement is insignificant compared to leading automakers such as BYD and Ideal, it is not easy for Yueda Kia to achieve this result after completing equity changes and senior management rotations in recent years.

Therefore, the government quickly launched special car purchase discounts for fuel and pure electric models in an attempt to grab another wave of market share. The company's best-selling models such as the Certus (manufacturer's suggested price 109,900 yuan), Kia K3 (112,900 yuan), and Lion Platinum Tuojie (179,800 yuan) are all included in the promotion, especially the 7-seater MPV model - Carnival (289,900 yuan), which can save up to 73,000 yuan in total.

However, the most eye-catching one is the Kia K3. If the old car is replaced, the discounted price of the car is only 75,900 yuan, which is even cheaper than the current "Internet celebrity chicken" in the car market - BYD Qin PLUS DM-i Honor Edition (guide price 79,800 yuan).

However, such preferential policies seem to have failed to impress Chinese consumers. Recently, Shijie visited Yueda Kia's 4S store located on the South Third Ring Road in Beijing. It is the only 4 remaining 4S stores of Yueda Kia in Beijing and the one closest to the commercial district.

Even with the combined geographical advantages and preferential measures, Yueda Kia seems to be having trouble selling here.

▲(Kia Motors after changing its LOGO)

When "Shijie" visited, there was only one salesperson in the store wearing Geely uniform. According to the salesperson, their store has been selling Yueda Kia for more than ten years, and the Geely brand was added more than a year ago.

When we asked to see the Kia K3, the dealer couldn't bring any. The salesperson said that the car had not been sold in the store since last year, and now there were no display cars. "It was not selling at all, and later they simply stopped stocking it."

Shijie found that compared with Geely's more than 1,000 square meters showroom next door, Kia's showroom is less than 1/3 of its size. "This used to be our training center, but now (Yueda Kia's) showroom is given to Geely." According to the salesperson, in recent years, few people have come to the store to inquire about Kia, and more people come to the Geely 4S store next door after shopping and come to take a look.

Currently, there are only six display cars in Kia's showroom, all of which are fuel-powered models. When "Shijie" visited, the lights in the showroom were not even turned on, and customers had to use their naked eyes to automatically adapt to the brightness inside and outside the store.

But before 2016, Kia's "treatment" was not like this. At that time, Yueda Kia was still called "Dongfeng Yueda Kia". With the Kia K series models, the store could sell more than 2,000 new cars a year. At its peak, Kia's annual sales in China were close to 650,000 vehicles.

With 2016 as the watershed, Kia's sales in China began to fall precipitously. Especially after Dongfeng Motor's withdrawal of its shares in 2021, Yueda Kia has been insolvent, and in 2022 it fell below the profit lifeline of 100,000 vehicles, with annual sales of only 94,000 vehicles.

In 2023, this Beijing 4S store sold only more than 240 Kia cars, while Geely next door sold more than 2,000. "(Kia's) sales for the year were only equivalent to Geely's (Geely's) sales for one month."

It took the dealership owner several years to accept the reality that Kia was not selling well, so he introduced Geely and trained it as a key department. At the same time, he reduced Kia's sales staff and transferred the motivated sales staff to Geely, while some sales staff who wanted to avoid idleness voluntarily stayed to "retire".

"Shijie" observed that there were many Kia cars parked outside the 4S store waiting for maintenance. Judging from the car logo, most of them were models before Kia changed its logo in 2021. This is also one of the reasons why the car dealership has not closed Kia stores so far - at least relying on after-sales maintenance, dealers can still make some money.

▲ (Comparison of Kia's new and old LOGO)

Overall, Yueda Kia is not very popular in the Chinese market. So where did the soaring production and sales volumes in the first half of this year, as well as the brilliant performance in June, come from?

At present, the company has not announced the sales share at home and abroad in the first half of the year, and Yueda Kia has not responded directly to "Shijie", but industry insiders speculate that it is most likely that "flowers bloom inside the wall and are fragrant outside the wall", and the increase in overseas exports may be the key reason for the surge in performance.

In the first half of this year, Yueda Kia's export scale ranked among the top domestic joint venture automakers. In 2023, the company's annual sales reached 166,000 vehicles, a year-on-year increase of 31.2%, of which nearly half were contributed by exports. Excluding export sales, Yueda Kia sold only 88,000 vehicles in the domestic market last year, lower than the 94,000 vehicles in 2022.

2. What happened to the leader of Korean cars?

Kia, whose full name is Kia Corporation, is the first automobile manufacturer in South Korea's history. After being merged into Hyundai Motor in 2000, it formed the Hyundai Kia Automotive Group.

Judging from the sales performance of global automakers, Kia's strength is not bad. In 2023, Kia ranked 7th in the global auto brand sales list with sales of 3.086 million vehicles. Its parent company, Hyundai Kia Automotive Group, once again became the world's third largest auto group after Toyota and Volkswagen with sales of over 7.3 million vehicles.

In the US market, Hyundai Kia Automotive Group's market share has exceeded 10%, and its share of the European market is as high as 9.4%.

▲ (Yueda Kia electric vehicle)

However, the group's 2023 financial report showed that Jiangsu Yueda Kia Automobile Co., Ltd., its joint venture in China, had total assets of 2.08 trillion won (about 11.374 billion yuan), total liabilities of 2.48 trillion won (about 14.057 billion yuan), and an asset-liability ratio of 119%.

As the leader of Korean cars, why is Kia doing so well overseas but struggling in the Chinese market?

In fact, Kia has won the favor of Chinese consumers due to its durability, beautiful appearance, comfort, high cost performance and low after-sales maintenance costs. But after 2016, everything changed.

In addition to factors related to the international environment, Kia's increasingly slow sales in China are more a matter of its own competitiveness.

According to industry insiders, in order to save costs and research and development, Hyundai and Kia often have several generations of new and old models living together, overlapping in price and positioning, resulting in serious internal friction among products and greatly affecting the brand image.

Moreover, in terms of users' perception of brands, Japanese cars often gain loyal fans with their low fuel consumption and high value retention rate, while Korean cars represented by Kia do not have a popular concept to speak of, and always follow the cost-effective route and implement the "golden mean" idea.

In addition, China's new energy vehicles have been developing in full swing in recent years, and independent brands have emerged. Consumers generally feel that Kia has fallen behind in this regard.

At present, Kia adopts the strategy of "fuel + pure electric in parallel" in the Chinese market, and has successively launched three new cars, EV6, EV5, and Sonai, as well as the K3 special edition model.

In particular, the Kia EV5 (manufacturer's suggested price starting from RMB 149,800) built on Kia's dedicated electric vehicle platform E-GMP is a competing model for Buick E5, Volkswagen ID.4 CROZZ, BYD Song PLUS EV, and AION V. The car will be first launched in China in 2023 and sold globally. The official said it was "tailor-made for the Chinese market" and is also the strategic core of Kia's electrification transformation in China.

It is said that nearly 400 elite Chinese engineers participated in the in-depth research and development of this compact pure electric SUV. However, according to Auto Commune, a Yueda Kia insider once revealed that at the beginning of the development of EV5, the Chinese side proposed to take more care of the preferences of Chinese consumers in the product definition, but was ignored by the Korean side.

Since there is no more information to confirm the attitude of the Korean side at that time, we can only use sales volume to speak for the time being. Officials said that Kia EV5 has been exported to markets such as Australia and New Zealand, with export sales reaching 1,389 units in May. During the same period, according to Yiche App statistics, the monthly sales of the car in the domestic market were only 353 units.

▲ (Yueda Kia EV5)

Looking back at Kia’s development history, its attempts at electrification were not late.

In 1995, Kia Motors exhibited its first hybrid concept car, the FGV-1, which caught GM and Toyota off guard in the hybrid field. In 1999, the Kia Sportage electric car was launched.

In the past few years, relying on its parent company's layout of new energy vehicle models and the advantages of integrated industrial chain, Kia has won the hearts of European and American consumers with its hybrid models, and even began to squeeze out some market share of Japanese cars.

In 2022, Toyota's sales of new energy vehicles, mainly gasoline-hybrid, decreased by 80,000 units in North America, a year-on-year decrease of 15%, while Hyundai Kia's hybrid models increased by 37.1% year-on-year to 124,200 units. However, in the Chinese market, it was not until 2023 that it announced the slogan of electrification transformation.

In fact, since 2016, Kia has been anxious about the declining sales in the Chinese market. Hyundai Kia Automotive Group has begun to learn from Samsung and gradually shift its focus to overseas markets.

In December 2018, Kia launched its engine export business. Later, it also exported a number of models such as EV5, Sonai, Cyrus, K5, Huanchi, and Spur to more than 50 countries in the Middle East, Asia Pacific, Central and South America, etc., as its main export products.

3. Will not give up the Chinese market

Yueda Kia's poor sales in the Chinese market is not an isolated case, but a microcosm of the plight of Korean cars in China. More broadly speaking, German and Japanese joint venture car companies have also not had an easy time in the Chinese market in the past two years.

Faced with Yueda Kia's different situations in domestic and foreign markets, Kia China's Chief Operating Officer Yang Honghai does not seem to have too many worries.

He told Shijie that in the second half of the competition in the domestic new energy market, major automobile manufacturers in the Chinese market are consuming their own funds in order to gain a larger market share, and joint venture brands have good profitability globally and can support their development in the Chinese market.

When talking about how to deal with the current "price war" in the Chinese market, he believes that with the withdrawal of BMW and Audi, when the industry enters a period of "value war" driven by technological innovation and product upgrades, the advantages of joint venture car companies will be further highlighted.

However, in May 2023, the company was exposed to arrange for management employees to take turns to rest in batches, which was regarded by the outside world as a "disguised layoff". Therefore, until now, there is still a rumor that "Kia is going to give up the Chinese market."

"Kia will not give up the Chinese market." Yang Honghai replied to "Shijie" affirmatively. In addition, Kia's global CEO Song Husheng has visited the Chinese market for research many times, emphasizing that ensuring the success of the Chinese market is the core of Kia's global strategy.

▲ (Yancheng, Jiangsu: Actual shot of Yueda Kia’s third factory)

According to Yueda Kia, in terms of research and development, Kia has established research and development teams such as the China Technology Research Institute, China Advanced Digital R&D Center, and China Big Data Center, in order to actively cater to the characteristics of the Chinese market and user needs, and to develop technologies and products that can better meet the needs of Chinese users.

Among them, the China Technology Research Institute is Hyundai Motor’s largest overseas R&D center and the only global new energy vehicle R&D center besides its R&D headquarters in South Korea.

In terms of channels, Kia is ready to deepen cooperation with large dealer groups, promote the construction and upgrading of terminal channels, and plans to orderly complete the renovation and upgrading of dealer stores across the country within the next two years.

Although Kia has already taken some measures to boost the Chinese market, its layout and growth targets for overseas markets seem to be clearer.

Yueda Kia told Shijie that the main overseas product sales points in 2024 will be Mexico, Saudi Arabia, Chile, Ecuador, Peru and other countries. "This year's sales are expected to increase by 116.1% compared with 2023 and 74.4% compared with 2022."

The export countries will also increase from the current more than 50 countries in the Middle East, Asia Pacific, Central and South America to more than 80 countries. In the future, the Jiangsu Yancheng factory will also be built into a global export base to achieve the annual export target of 170,000 units.

Frankly speaking, it is not easy for joint venture automakers to make money again in today's Chinese auto market. Regardless of whether Yueda Kia can rejuvenate in China as expected, at least compared with other joint venture automakers, it has found a more comfortable path overseas.

Author | Lin Qiuyi

Editor | Tian Yanlin

Operations | Liu Shan