BMW to pay $820m to support China car dealers
CRI, January 6, 2015 Adjust font size:
BMW has agreed to a package of lump-sum payments worth around 820 million US dollars to its dealers in China.
The automaker's Chinese dealers have been threatening to stop putting in orders following a year of poor sales and high inventories.
Under the dealership structure in China, automakers are allowed to set sales quotas for their dealers, meaning their dealers are virtually obligated to purchase vehicles from the factory line, even if they know the products aren't selling.
The China Automobile Dealers Association claims that around 70-percent of all BMW dealers in China have occurred losses this past year.
The Association also says average dealer inventories are running at 1.8 times what they're actually selling.
This is well above 1.5 times, which is considered an alert line.
