The world’s largest auto market and the second-biggest economy globally sees clouds gathering on the horizon, with forecasts of the slowest economical growth since 1990 and predictions that auto sales would only match last-year’s increase.
Last year’s auto deliveries showed signs of growing weak, climbing just 6.9% from the figures tallied back in 2013, when the increase was double at 14 percent – and the anticipated prospects of an even slower market has unsettled the sales networks of foreign automakers. The dealers have united against their partners, claiming that automakers impose unrealistic sales margins if they want to qualify for year-end bonuses and threatened to quit the networks if support was not provided to make up for the lost profit.
The German group Volkswagen AG counts China as its largest market, so the automaker has pledged to continue its policy of proposing “sensible” sales quotas in order to ensure financial wellbeing. The carmaker announced yesterday it would aim for a “mutually beneficial and sustainable partnership” with its local Chinese dealers, with a spokesperson commenting for Reuters “through close cooperation and constant exchange with our dealerships in China, we constantly develop the VW brand together with our sales partners.” Chinese auto dealers have even complained to the government that automakers proposed the sales targets during a market boom and when the slowdown installed they refused to change them, forcing the sales network to suffer losses because of excessive stock and increased incentives. Earlier this month, the China’s dealers’ association claimed it negotiated with BMW for 5.1 billion yuan (541.1 million pounds) worth of dealer subsidies.