(Yicai Global) Nov. 5 -- Dongfeng Motor will sell its entire stake in a joint venture with South Korea’s Kia because of continuous losses at the JV, a source close to the Chinese carmaker told Yicai Global, adding that the sale was agreed with the other shareholders in August.

Wuhan-based Dongfeng Motor owns 25 percent of Dongfeng Yueda Kia Motor, which was formed in 2002. Jiangsu Yueda Investment also has a 25 percent interest. Seoul-based Kia, part of the Hyundai Motor Group, owns the rest.

The JV’s sales have been dropping since peaking in 2016, partly due to management problems and product cycle issues. Sales fell sharply again last year and the firm lost nearly CNY1.2 billion (USD187.4 million), per Yueda Investment’s 2020 earnings report.

The JV sold less than 120,000 vehicles in the first nine months of this year, down 17.6 percent from the same period last year.

Dongfeng Motor got its stake thanks to its car manufacturing license, but it has not actively put resources into the JV, an insider at Dongfeng Yueda Kia said, adding that the venture can only carry out decisions when there is a consensus among the three shareholders, which has affected its progress.

Dongfeng Motor’s withdrawal and Hyundai’s structural reforms in China since July will help the JV, which will also be better able to use Kia’s resources worldwide, the person said.

Editor: Tom Litting