April 26, 2024

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[THE INVESTOR] Over 100 Kia Motors dealers in China are demanding 2.4 billion yuan (US$348.86 million) in compensation from the Korean automaker for losses brought about by unsold stock, according to the Wall Street Journal on Jan. 16. 

The dealers also refused to sell cars unless their demands -- for monthly targets set in accordance with each individual dealer's inventory and sales rather than production levels, among others -- are met.  

“Many of us are unable to get loans from banks because of the high inventory. If the funding shortage goes on, many will likely fail,” dealer Chen Keyun, who represents the group, was quoted as saying in the report. 

Chen, together with 100 other dealers, sent a letter to Dongfeng Yueda Kia, Kia’s Chinese joint venture, seeking help to offset the losses due to Kia’s slowing sales in the world’s largest auto market.

Hyundai Motor Group Chairman Chung Mong-koo at Kia Motors' second Chinese auto plant in Yancheng, Jiangsu Province.

In the letter, the dealers said they have 150,000 unsold cars in inventory, which reflects more than two months of sales. They also added they would not take any Kia cars before the inventory falls below 1.2 months.
A Kia spokesman was unavailable to comment on the matter.

Kia’s auto sales in China grew 4.4 percent last year, lagging behind the country’s overall auto sales that jumped 15.5 percent on-year.

By Ahn Sung-mi (sahn@heraldcorp.com)