Talks Fail Between Audi and Its China Dealers Over SAIC Motor Alliance
Yicai Global
/SOURCE : Yicai
Talks Fail Between Audi and Its China Dealers Over SAIC Motor Alliance

(Yicai Global) Nov. 25 -- Talks between Audi AG and its China dealers over their fears about a long-term collaboration deal between Audi and SAIC Motor Corp. have collapsed, an informed source told Yicai Global.

"Get ready because the talks broke down," the boss of a Shanghai-based Audi dealership is quoted as saying by the source. "We won't buy any cars from Audi, if no reply is received by the Dec. 1 deadline."

FAW-Volkswagen Audi Co. dealers are against a partnership between the German luxury carmaker and SAIC, China's biggest auto manufacturer, after the two signed a framework agreement earlier this month that could lead to SAIC making and selling Audi models. Reports say the dealers are demanding subsidies from Audi worth more than CNY20 billion (USD2.89 billion).

Representatives from 15 dealer groups started talks with top Audi executives in Foshan in the southern Chinese province of Guangdong on Nov. 21, asking the Ingolstadt-based company to give a satisfactory response before Dec. 1 or they will stop placing orders, according to the China Automobile Dealers Association.

Available information suggests that the two sides failed to arrive at a consensus and many dealers involved in the talks may stop buying Audi cars from next month.

However, year-end rebates offered by manufacturers have a huge impact on dealers' annual profits, making up more than half of the total, according to an industry expert. It remains doubtful that all the dealers would stop ordering from Audi when it would entail substantial financial loss.

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