Bayerische Motoren Werke AG agreed to give 5.1 billion yuan ($820 million) to its distributors in China to help cover their losses after the retailers threatened to stop ordering cars from the manufacturer, a dealer’s group said.
The subsidies will be paid by the end of February and represent the largest payout by an automaker in China, said Song Tao, a deputy secretary general of the China Automobile Dealers Association, which represented the BMW distributors in the negotiations. The dealers are still in talks with the Munich- based carmaker over this year’s sales targets, he said.
Auto dealers have complained of mounting losses as demand slowed with the world’s second-largest economy and as large cities imposed purchase restrictions on vehicles to control congestion and air pollution. Unsold stock on dealer lots rose to the highest level in November since August 2013, according to the association’s data.
The negotiations for financial support are part of a broader push by China’s auto retailers to gain more autonomy from manufacturers, which currently dictate the number and type of cars they sell. Sales targets are crucial because dealers must meet them to qualify for year-end bonuses, which account for more than half of their annual profit from selling cars, the China Auto Dealers Chamber of Commerce, a separate distributor group, said last month.
Read more at China Daily.