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Published on : Jul 20, 2015

Audi AG is offering US$193 million financial aid to the automakers dealers in China, due to dropping demand for luxury vehicles in the world’s largest auto market, as per people associated with the matter.

The money will be received by distributors in China, as informed by people with the plan. The automaker has already reduced its sales target for 2015 from 600,000 units from last year’s sales. The company delivered 578,932 vehicle sales in China which also includes Hong Kong as compared to last year.

In a growing strong competitive market environment, Audi has put a strong focus on a financially robust healthy dealer network, stable prices, and guaranteed service quality. As stated by an email response, Audi China said that the company strives to work in close alignment with dealers without keeping with subsidy or cutting sales target.

The subsidies from AUDI follows that of Volkswagen AG, which decided to give financial aid to some Chinese dealers earlier in the month as automobile demand dropped in the middle of stock market volatility.  Toyota Motor Corp and BMW AG have also agreed to give aid to their dealers to make up for losses earlier in the year.

Dealers are coming together to address lower sales targets and ask for a larger share of profits from automakers with waning demand.

The days when dealers needed to beg automakers to plead for cars sales are over, as stated by Lin Huaibin who is an HIS automotive analyst based in Shanghai. It is anticipated that other premium automakers will follow the suit in the next coming months and dole out subsidies as well.

The share of Volkswagen dropped by 1.4% to 197.3 euros at Frankfurt 9:59 am.