SHANGHAI (Bloomberg) -- Renault will give its China dealers more rebates as demand in the world's biggest auto market slows and the carmaker's local business prepares for a new production plant due to open there next year.
Dongfeng Renault Automobile Co., the company’s local joint venture, will "improve dealers' profitability through additional and faster rebate," the company said.
The carmaker, which met with its dealers on Thursday, will also moderate sales targets for this year so "the majority of dealers could keep up," it said, without providing details.
Renault's help to its dealers follows agreements reached by Volkswagen Group and BMW Group with their distributors in China. Dealerships in the country have asked for financial support and lower sales targets from carmakers after a combination of rapid expansion of sales networks, slowing sales and increased restrictions on ownership by cities hurt profit.
Sales growth of passenger vehicles will probably slow to 8 percent this year from 10 percent in 2014, according to the China Association of Automobile Manufacturers.
Dongfeng Renault's support to its dealers comes as it prepares to start sales of locally produced vehicles from 2016. Renault and Dongfeng Motor Group Co. are investing 7.7 billion yuan ($1.2 billion) to build a factory that will make 150,000 SUVs. The venture is looking to add 57 dealer outlets by the end of this year taking the total to 159, according to the company. More than 50 percent of the dealers made profits last year while two quit its network, the automaker said.
Renault said last week that it will make "massive investments" in China where it sees its market share rising as high as 6 percent after the company ramps up sales of locally-built vehicles.
The automaker, which currently only sells imported vehicles in China, reported sales rose 26 percent to 33,425 units last year.
Automotive News Europe contributed to this report