Audi suspends talks with SAIC on sales link

Updated 2016-12-02 10:37:28 Global Times

Germany-based luxury car maker Audi AG reportedly agreed on Thursday to temporarily suspend sales channel negotiations with SAIC Motor Corp, amid protests by FAW-affiliated dealers.

But the company said it would restart negotiation among involved parties no later than the end of March 2017.

Audi AG agreed to the temporary halt, said a magazine under domestic newspaper The Mirror late on Wednesday, citing a confidential internal Audi document.

According to the document, Audi will further negotiate cooperation with SAIC when the existing FAW-affiliated dealers have achieved a long-term and stable profit situation.

Negotiations among Audi, SAIC and Audi's existing dealers should start no later than the end of March 2017.

On November 14, domestic automaker SAIC Motor Corp announced that it had signed a "cooperation framework agreement" with Audi's parent company Volkswagen AG for Audi to manufacture and sell vehicles in China.

On November 21, a group of more than 30 Audi dealers presented their demands to Audi in Fo-shan, South China's Guangdong Province. They asked the company to respond to the demand that it abandon cooperation with SAIC before December, media reports said. Otherwise, the dealers said they wouldn't replenish their inventories of Audi vehicles.

Audi has cooperated with FAW Group Corp for more than 20 years. Currently, Audi manufactures all its cars in China with FAW Group Corp in Changchun, Northeast China's Jilin Province and Foshan.

Audi decided to cooperate with SAIC because of the positive outlook for China's luxury car market, domestic financial news portal reported in November, citing CEO of Volkswagen Group China Jochem Heizmann.

Audi's sales have grown sluggishly in China. Latest data for luxury car sales showed that Audi sold 487,300 vehicles in China in the first 10 months of 2016, increasing 5.7 percent year-on-year.

BMW posted faster sales growth of 10.2 percent to 423,300 vehicles in the same period. Mercedes-Benz saw strong growth of 27.3 percent to 387,015 cars from January to October.

Media reports said that Audi's upgraded models - the A8, A6 and Q5 - will enter the Chinese market in 2017, which means 2017 may be the year when Audi's existing dealers achieve "a long-term and stable profit situation."

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