Audi dealers in China are demanding 28 billion yuan (US$4 billion) to cover losses over the past three years that they blame on the automaker adding too many distributors, potentially worsening a sales decline that saw BMW AG and Mercedes-Benz overtake the luxury brand last month.
The dealers met on Thursday in Sanya, China, and issued a statement saying their newly formed group would oppose Audi’s planned formation of a second joint venture in China until the German automaker managed to reach 1 million in annual sales in the nation.
Audi sold a little more than half that many units in China, including Hong Kong, last year.
“We are clarifying the allegations” of losses between 2014 and last year, Audi China spokeswoman Johanna Barth said by telephone on Thursday. “To our knowledge, the overall business of Audi in China was profitable in those three years.”
Song Tao (宋濤), a representative for the group of dealers, said they are working closely with the automaker to achieve “mutual benefits,” declining to specify what action they would take if their demands are not met.
Once a highly lucrative trade, profits from automobile distribution have slid as automakers expanded their sales network and car ownership became widespread in major Chinese cities.
Dealers in China are also over-reliant on the sale of new cars, whereas used-car sales and servicing make up the bulk of a dealer’s income in the US.
Besides Audi, distributors for Kia Motors Corp, BMW and Toyota Motor Corp have also demanded financial assistance from automakers in the past two years.
Volkswagen AG, the parent of Audi, has sought to revive growth by adding another sales network through a second joint-venture partner. That plan ran into a wall of opposition from existing Audi dealers, who briefly threatened to stop sales before the automaker agreed to discuss the payment of subsidies.
In its statement, the Audi dealers said that back in 2012 the automaker had targeted 1 million in sales by 2020 on a network of 580 outlets. However, there are now 530 outlets, even though deliveries failed to break through a “bottleneck” in the past three years of about a half million units.
Audi should come up with a “suitable solution” based on the target and the excess number of distributors, the group said.
Audi delivered 591,554 units in China including Hong Kong last year, an increase of 3.6 percent.
The automaker is seeking clarification, as it did not set a target of 1 million sales units by 2020 in China, Barth said.
After entering the nation in the late 1980s with China FAW Group Corp (第一汽車) and building an early lead, Audi sales rose and the marque became the quasi-official ride of high-ranking government officials and privileged businesspeople.
The luxury marque recorded its first annual sales drop in China in more than a quarter of a century in 2015. Near its peak, about 2000, the German brand accounted for about 70 percent of government and state-owned company fleets in China.
Audi lost its leadership in China’s premium car segment last month as deliveries fell 35 percent to 35,181 units.
Sales of Daimler AG’s Mercedes-Benz and BMW both surpassed Audi as they increased 39 percent and 18 percent to 59,000 units and 51,000 units respectively.
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RSS