Some of BMW’s dealers in China are asking the Bavarians to reduce their sales targets due to China’s slowing economic growth and an anti-corruption crackdown on government officials.
The relationship between the two partners is becoming increasingly strained, with some Chinese dealerships saying they won’t take new vehicles unless BMW agrees to lower sales targets and pay them subsidies.
Executives at two BMW dealer operators said they are asking BMW to lower its sales target for 2015 and pay dealers five billion yuan ($806 million) in subsidies. If the conditions couldn’t be met, dealers would stop taking orders of BMW cars from Thursday at the earliest, they said to Wall Street Journal.
“BMW cars are competitive in terms of performance and branding. But the company’s management is too aggressive and not reasonable,” said a dealer based in the southeastern province of Fujian. “If they continue to ask for a double-digit growth rate for 2015, I think many of its dealers will go bankrupt,” he said.
Audi recently agreed to pay a package of about two billion yuan in subsidies to its Chinese dealers.
The dealers said they haven’t reached an agreement with BMW over sales targets and business policies for 2015.
“Talks over sales targets and bonuses should have been ended. But this year the talks have yet to start,” said the Fujian-based dealer. “We are fretting that BMW will continue to set an unreasonably high sales target for us,” he added.
The company has more than 420 dealerships in China, while Audi has about 370. In the first 11 months of 2014, Audi sold 516,356 cars in China, up 16% from a year earlier, and BMW’s sales in the country rose 17% to 415,209 cars over the same period.