Photo credit: Dongfeng Yueda Kia
According to the announcement, DYK intends to raise $600 million through a capital increase. Yueda Investment, its shareholder of 25% stake, decided to withdraw from the action due to the rather fierce competition in China’s auto industry and other project investments needs. The funds that DYK needs from Yueda Investment to complete the capital increase will be contributed by Yueda Automobile Group instead.
Yueda Automobile Group is another joint venture under Yueda Group with a 70% stake, while Yancheng State-Owned Assets Group holds the rest 30%.
According to Yueda Investment, after the capital increase goes through, the company’s stake in DYK will be diluted from the current 25% to 4.2%. The action further supports Yueda Investment’s decision to no longer sees automaking as the group’s mainstay business, and it will actively seek other projects to raise its profitability.
Additionally, the record showed that Dongfeng Yueda Kia reported a total loss of RMB4.75 billion in 2020. In the first nine months of 2021, the company's net loss amounted to RMB1.715 billion.
Notably, in December 2021, Dongfeng Motor Corporation has officially withdrawn from the joint venture.