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:

Pin It

Comments

Recommended

Owning a supercar in the past meant you’ll have to compromise. But there’s no need for that anymore - thanks to the Ford Performance engineers. The company ensures that you...
by - March 30, 2017
Tesla marked a major milestone as it surpassed Ford in market capitalization. Automaker Tesla, formerly known as Tesla Motors, closed out the trading on March 27, 2017, with a market...
by - March 30, 2017
The mid-cycle facelift for the Mercedes-Benz's S-Class have been disclosed to the public eye via these leaked shots. The images that recently surfaced and others like it were published online...
by - March 30, 2017
Reddit user Jdubbswrx spotted a rather deceptive move coming from the German automotive manufacturer Audi. He posted an image of the supposed exhaust of the new 2018 Audi SQ5 sporting...
by - March 29, 2017
McLaren car owners will be thanking the automotive company as it has decided to roll out new goodies for the 540C, 570S and 570GT sports car line-up. From this series...
by - March 29, 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