BEIJING (Bloomberg) -- Volkswagen Group said it has reached an agreement with its dealers in China and pledged to continue setting reasonable sales targets to ensure a financially sound distribution network.
Larissa Braun, a Beijing-based VW spokeswoman, confirmed the agreement without giving additional details. The state-backed China Association of Automobile Dealers said Jan. 23 that the company and its distributors had found ways to "actively cope” with tough market conditions.
Dealerships in China have asked for financial support and lower sales targets from manufacturers after a combination of rapid expansion of sales networks and increasing car ownership restrictions by cities hurt profit.
Growth in China's auto market, the world's biggest, halved to 7 percent last year from the year before.
Renault faced criticism earlier this month from a China dealer that said the carmaker had set lofty sales targets and forced dealers to buy more cars than they could sell, resulting in price cuts and heavy losses.
This follows comments from China's dealers' association earlier this month saying that it had persuaded BMW Group to pay 5.1 billion yuan ($824 million) in subsidies to dealers. Porsche and Toyota Motor Corp. are also negotiating with their Chinese dealers over subsidies and sales targets.
More auto dealerships in China quit their sales networks last year after profitability deteriorated, the China Auto Dealers Chamber of Commerce, a separate trade group, said today.
A survey by the dealers chamber of commerce found that distributors of Honda Motor Co.'s premium Acura brand were the least satisfied, while Volkswagen's Audi ranked first. The number of vehicles sold at a loss rose, according to the group, which didn't disclose details of its survey.