Expanding production to seize the market The brutal growth of modern Kia in China

Last week, Zheng Mengjiu, president of Hyundai Kia Motors Korea Group, arrived in Yancheng, Jiangsu. After a two-day inspection, on November 2nd, the Yancheng City Government and Kia Auto Co., Ltd. signed the "Dongfeng Yueda Kia Expansion Investment Cooperation Agreement" in Nanjing. With a total investment of 800 million U.S. dollars, it plans to build a third Kia plant in Yancheng in Yancheng with an annual production capacity of 300,000 vehicles. After completion in 2013, Kia’s annual capacity in China will reach 730,000 vehicles. In addition, Hyundai Motor’s third plant will be put into production. In 2014, the production capacity of two Hyundai-Kia Korean cars in China will reach 1.73 million.

By expanding production and seizing the market, according to the “Dongfeng Yueda Kia Expansion Investment Cooperation Agreement” signed by both parties, the two parties will build a new automobile factory with an annual output of 300,000 vehicles in the Yancheng Economic and Technological Development Zone and set up an R&D center and an international automobile in Yancheng. Test site.

It is reported that the total investment of the project is 800 million U.S. dollars. It is planned to begin construction in March 2012. The construction period is 22 months and it is expected to be completed and put into production by the end of 2013. After the completion of the project, the capacity of Dongfeng Yueda Kia Motors will reach 730,000 vehicles.

Kia Motors stated that the new plant will “produce a strategic model developed specifically for the Chinese market” and increase its production capacity from the current 430,000 units to 730,000 vehicles, “to satisfy the Chinese market’s surge in local demand and maintain sales momentum.”

On the same day, Kia also announced that cumulative sales in the Chinese mainland market in the first 10 months of this year have exceeded total sales of the previous year, reaching 414,682 vehicles. The models that mainly promoted sales were the B-Class K 5 and the A-Class K 2. In September, they sold 41,500 vehicles in China, K 5 accounted for 4001, and K 2 reached 10,478.

Judging from its market share, Kia holds a 2.0% share in China, ranking 18th; in 2010, it jumped to 13th and its market share has even risen to 3.0%. In the first three quarters of this year, Kia has ranked among the top 10 Chinese sales, with a market share of 3.5%.

Judging from the performance of Kia Motors' only joint venture in China, Dongfeng Yueda Kia, the commissioning operation of its second plant in 2008 increased its sales volume by 40% year-on-year. In 2009, the year-on-year increase was as high as 70%. “The two consecutive years of rapid development of the Chinese auto market in 2009 and 2010, and Kyocera's market launches such as Furuidi and Zhirun, coupled with ample capacity, have occupied a place.” Sun Shiqing, an observer of the auto industry, said.

The Korean car made 1.7 million capacity plans in China. The Kia third plant in Dongfeng Yueda was selected by twists and turns. Earlier this year, it was reported that it was likely to be sited in Jiangning, Nanjing. It was rumored that its third plant project was stranded in July and was hidden behind it. What's more, all over Jiangsu are eyeing such a 300,000 capacity car project. In the end, the Yancheng government took this big "cake."

Unlike the VW, Nissan, and GM factories in China set up in different cities, all three Dongfeng Yueda Kia plants are located in Yancheng. From the perspective of logistics and distribution, is it not conducive to reducing costs? According to Zhou Zhihua, head of Dongfeng Yueda Kia South China, when the production capacity reaches a certain scale, the three factories are located in the same city. Coupled with the accumulation of supporting companies, the impact of logistics costs will be greatly reduced.

By 2014, Dongfeng Yueda reached 730,000 vehicles in China. In addition, in November 2010, the third factory of Beijing Hyundai laid the foundation, and it will be officially put into production next year. Beijing’s modern production capacity will also reach 1 million. By then, South Korea's Hyundai Kia Motors will have 1.73 million vehicles in the Chinese market.

“Through the improvement of vehicle quality and technology accumulation in the past few years, the overall technical content of Korean cars has been equal to that of Japanese cars.” It is not uncommon for Korean car manufacturers to hold this view. However, it can be renewed after the expansion. “Barbarian growth” is not an easy task. In the new energy-saving subsidies policy, none of the Korean cars were selected. In South China, in October, sales of Korean cars decreased by more than 20% in September from the previous month.