Business / Auto China

BMW to pay $820m to support China car dealers

(Agencies) Updated: 2015-01-05 15:23

BMW to pay $820m to support China car dealers

A BMW logo is pictured at the Jacob Javits Convention Center during the New York International Auto Show in New York April 16, 2014. [Photo/Agencies]

Automakers are increasing the number of factories even as more cities in China impose purchase restrictions on vehicles to control congestion and air pollution. Shenzhen, the large metropolis bordering Hong Kong in southern China, on Dec 29 followed other Chinese cities including Shanghai, Beijing and Guangzhou in setting quotas on new vehicles.

Unsold stock on dealer lots rose to the highest level in November since August 2013, according to the association's data.

BMW's payout increases pressure on other automakers facing similar demands by their dealerships for financial support. As many as 10 percent of dealers for one of Toyota Motor Corp's China ventures are poised to drop out of the network because they can not make money on the cars they are told to sell, the dealers association said.

The negotiations for financial support are part of a broader push by China's auto retailers to gain more autonomy from manufacturers, which dictate the number and type of cars they sell. China Auto Dealers Chamber of Commerce, a separate distributor group, said last month that sales targets are crucial because dealers must meet them to qualify for year-end bonuses, which account for more than half of their annual profit from selling cars.

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