(Yicai Global) Nov. 19 -- Dongfeng Motor Corp. is selling its entire stake in its joint venture with South Korean automaker Kia Corp. for CNY297 million (USD46.5 million) after the JV racked up heavy losses, the Chinese car giant said in a filing to the Shanghai United Assets and Equity Exchange today.

Dongfeng Yueda Kia Motor lost more than CNY2.6 billion (USD407 million) in the first 10 months this year, and last year it hemorrhaged CNY4.75 billion (USD743.83 million), Wuhan, central Hubei province-based Dongfeng Motor said. The JV, which was set up in 1992, had CNY350 million in net assets and a value of almost CNY1.2 billion as of March 31.

The three stakeholders, Dongfeng Motor, Jiangsu Yueda Investment and Seoul-based Kia which hold 25 percent, 25 percent and 50 percent equity respectively, came to an agreement regarding Dongfeng Motor’s withdrawal in August, a company insider told Yicai Global.

Dongfeng Motor was originally brought into the JV by Yueda Investment for its vehicle production license, the person said. The company has not invested much in the JV and the JV lacks good management. This is not so obvious when there is a bullish market but once the market changes, it makes it more difficult to operate, he added.

Sales have been falling since 2017. In the first nine months Dongfeng Yueda Kia Motor shifted 120,000 cars, a drop of 17 percent from the same period last year. Last year sales were down 40 percent to 249,000 units from its peak period in 2016.

Editor: Kim Taylor