Visitors pass by FAW-Volkswagen Audi's booth at the Guangzhou auto show in November 2016. (Photo/China Daily)
Carmaker delays new network, but production planning continues
German premium automaker Audi AG has decided to temporarily suspend its talks with SAIC Motor Corp over selling its cars because of protests from its existing dealers. But analysts say there is no chance that such opposition would stop the two carmakers' cooperation.
Audi's compromise came after a lengthy, quarrelsome meeting in Beijing involving the heads of Audi China, the Audi sales unit at FAW-Volkswagen Automobile Co, nine representatives of the more than 400 dealers and officials from the dealers association on Nov 30.
The meeting took place one day before the deadline the dealers had set, the date by which they would stop taking Audi stock if they could not have a "clear and satisfactory answer" from the automaker about how to protect their interests. This follows the breakdown of a previous round of talks nine days earlier.
Dealers believe the carmaker's intention to set up another sales network would increase competition and make their life harder, claiming some of them are already burdened with high inventories and other financial problems.
A confidential document signed by Audi China head Joachim Wedler, which is one result of the Nov 30 talks, said it "agrees to temporarily stop the negotiation with SAIC regarding a dealer network and sales channels" until the company's current dealers see stable profitability.
The document, the authenticity of which was confirmed by a source close to Audi, said representatives from Audi dealers and FAW Group Corp will be invited to join the talks between Audi and SAIC when they are resumed before March.
It also shows that FAW-Volkswagen's Audi sales unit will "ensure competitiveness and profitability for today and the future" for the current dealership network, and that it will improve its "regional management of the sales network".
The sales unit could not be reached for comment regarding the next steps, including whether there will be compensation for dealers who claimed the automaker has set unrealistic sales targets and misled them into building more outlets.
There are already 449 dealerships in the country and dozens under construction.
Chinese media reports say the amount of compensation, if there is any, could be as much as 20 billion yuan ($2.9 billion).
