Audi Dealers in China Oppose SAIC Partnership

Audi dealers in China are threatening to suspend sales if Audi AG goes through with a plan to partner with SAIC Motor Corp. on local production and sales.

The dealers reportedly also demand 1 billion yuan ($145 million) in compensation for lost business if the deal is completed. Last week SAIC signed a memorandum of understanding with Volkswagen AG, Audi’s owner, to collaborate on both local assembly and import sales.

Audi already builds some models locally through a venture with China FAW Group Corp. But the company is eager to polish its image as the favored brand of government officials amid an FAW scandal that has removed several of the state-owned company’s top executives.

Audi’s 450 dealers in China complain that launching a second partnership will erode their already shrinking sales volume by adding new retail outlets in China. Analysts concur. Even so, Audi is handily outselling rivals BMW and Mercedes-Benz.