VW Group reaches an agreement with dealers in China over sales target

Article by Andrew Christian, on January 29, 2015

Volkswagen Group has agreed with its dealers in China, vowing to continue setting reasonable sales goals to make sure that its distribution network remains financially sound. The China Association of Automobile Dealers announced Jan. 23 that VW and its retailers had found ways to "actively cope” with tough market conditions in the country.

VW is one of the carmakers that local dealers have approached to request financial support and lower sales targets. These dealers have found their profits hurt by rapid expansion of sales networks as well as tightening car ownership restrictions set by Chinese cities.

Earlier this month, a dealer criticized Renault for setting high sales targets and forcing retailers to buy more cars than they could sell – leading to price cuts and heavy losses.

The association also disclosed earlier this month that it had convinced BMW Group to shell out to dealers around CHY5.1 billion ($824 million) in subsidies.

Other carmakers also holding talks with dealers in China include Porsche and Toyota Motor Corp. According to the China Auto Dealers Chamber of Commerce, more dealers are exiting the sales network after experiencing a hit in their profits.

Topics: vw, china, sales, dealer

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