Audi's plan for second joint venture in China terminated: report

Updated 2017-03-30 09:31:33 Global Times

A cooperation project between Audi AG and China's largest automaker SAIC Motor to make and sell the luxury brand's models in China has been suspended, and it will only restart when Audi can sell 900,000 vehicles in the Chinese market annually, industry website autohome.com reported on Wednesday.

Even if the cooperation goes through, Audi won't look for a new sales channel, and the existing distribution networks through SAIC and FAW Volkswagen are supposed to be combined, the report said.

The decision was announced after Dietmar Voggenreiter, board member for sales and marketing at Audi, SAIC vice president Qin Huanming and 12 vice chairmen from the China Audi Dealer Association met on Monday to address recent conflicts between the German maker and its dealers.

In February, Audi dealers in China issued a statement in Sanya, South China's Hainan Province, saying that “they opposed the German maker's planned formation of a second joint venture in China unless the company's annual sales in the country reach 1 million by 2020.”

Otherwise, the dealers said that they would stop selling Audi's vehicles.

They also demanded 28 billion yuan (.06 billion) from the automaker to cover their losses from 2014-16, and a guaranteed net profit margin on sales of more than 3 percent, according to the statement.

The dealers claimed that many of them have seen profits shrink or even lost money as Audi broadened its sales networks and distributors in China.

During the negotiations on Monday, Audi dealers defended their interests in terms of maintaining the current sales networks, but the three parties have not reached a consensus on compensation and profits, the report said.

Audi's sales in the Chinese market represent one-third of its global total.

However, from January to February, Audi lost its leadership in China's premium car market, with deliveries declining 31.5 percent year-on-year to 67,336 units. During that period, the sales of two competitors, Mercedes Benz and BMW AG, grew 31.5 percent and 14.7 percent to 95,076 and 92,045 units, respectively, according to media reports.

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