BMW agrees to pay $820 Million to its distributors in China

Article by Christian A., on January 6, 2015

BMW has reached an agreement to provide CHY5.1 billion ($820 million) in subsidies to its retailers in China to help cover their financial losses as they halted placing orders from the German carmaker, according to China Automobile Dealers Association.

According to the group’s deputy secretary general Song Tao, the subsidies will be paid by the end of February. BMW and the dealers are still holding discussions over the sales targets for this, Tao said. Dealers are complaining about the unrealistic sales targets that would make them legible for year-end bonuses.

The move by BMW to subsidize its Chinese dealers may place further pressure on other carmaker to provide similar incentives to their sales network in the country. Toyota Motor Corp. has seen threats from its dealers to exit the sales network of one of its local joint ventures due to increasing losses.

Han Weiqi, an analyst with CSC International Holdings Ltd., remarked that while the BMW’s move to “give funding of such big scale” is unusual, it will smooth relationship with the dealers, which is in the carmaker’s best interests.

BMW said in an e-mailed statement to Bloomberg that slowing sales growth in China means a “new normal” is emerging. The carmaker added that the parties “reached consensus on the structure of optimized business measures and financial allocation for the dealers.”

BMW is planning to support its dealers through additional activities like financial services and used car sales. BMW said these activities offer “large potential” for the carmaker and its dealers.

The carmaker, through over 440 BMW sales outlets and 100 Mini stores, sold 415,200 vehicles in China in the first 11 months of 2014.

Topics: bmw, china

If you liked the article, share on:

Comments

Recommended

Another day, another record. Is the new Dodge Challenger SRT Demon the fastest car to date? According to some sources, the Dodge Challenger SRT Demon had just beaten the Tesla...
by - April 24, 2017
Following in the footsteps of the McLaren 570S, 540C and 570GT is the newest addition to the McLaren Sports Series -- the roofless 570S Spider. McLaren 570S was rolled out...
by - April 24, 2017
The British automaker Lotus is noted for releasing low production, limited editions of its sports car lineage. Now the Hethel-based automobile manufacturer is back at it again with its latest...
by - April 24, 2017
Earlier this week, the revamped 2018 Mercedes-Benz S-Class was revealed ahead of the 2017 Shanghai Auto Show. As expected, Mercedes Benz’s flagship model is now offered in several variants including...
by - April 24, 2017
Well, this is clearly not good news for everyone. Ever since the new BMW M4 CS rolled out in Shanghai last week, several reports about its limited production have quickly...
by - April 24, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries