Renault accused by China dealer of setting unrealistic targets

Article by Andrew Christian, on January 22, 2015

A dealer in China has accused Dongfeng Renault Automotive Co. – a joint venture between Renault and Dongfeng Motors – of setting very high sales and forcing local retailers to acquire more vehicles than they could dispose. The accusations were made in a letter posted in the Web site of official newspaper People's Daily.

According to the dealers, Renault’s moves led to price cuts and heavy losses among dealers. It said that around 90 percent of the Renault local dealer network suffered financial losses in 2014 and called for a united front against the brand to force it to set realistic sales targets.

The letter came ahead of a dealers' conference set later this month, during which Renault is expected to set 2015 sales targets for its Chinese retailers. In an e-mailed statement to Reuters, Renault said that sales at it’s the joint venture surged 26 percent in 2014, noting that its dealers were at "the front line in the battle for China market share."

The company, however, said that its dealers are independent business organizations vulnerable to market forces, adding that it would offer support to retailers experiencing "mismanagement and poor performance."

The brand has plans to increase the number of its dealers in China 50 percent this year to 150 retailers as it bids to command a larger market share.

Earlier this month, BMW agreed to provide CHY5.1 billion ($824 million) in subsidies to its local dealers, according to China's dealers' association. The association said that Porsche and Toyota Motor Corp. are also holding talks with their Chinese dealers over subsidies and sales targets. Vehicle sales in China only grew 7 percent in 2014.

Topics: renault, china, dealer, sales

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