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.

If you liked the article, share on:

Topics: bmw, china

Comments

Recommended

We’re willing to bet that the Bentley Bentayga is not the first thing that comes to mind for most people who are into off-roading and outdoor activities. It just doesn’t...
by - November 23, 2017
The other day, it was confirmed that Volvo will finally bring the XC40 to US soil, where it will first make an appearance at the 2017 Los Angeles Auto Show....
by - November 23, 2017
There is no question that the new BMW M5 (F90) high performance sports sedan is more powerful, faster and more enticing than the previous model. But for interested customers in...
by - November 23, 2017
Following the Tesla Roadster’s electrifying revelation on Thursday, Musk’s highly ambitious goals have skyrocketed when he tweeted about his future plans for the new sports car. Well, kind of. The...
by - November 23, 2017
Earlier in November at the 2017 SEMA Show in Vegas is when Hennessey unwrapped the Venom F5 to all of us. But it was actually first introduced as a concept...
by - November 22, 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