Audi Reach Accord with Dealers in China

Volkswagen AG’s Audi unit has finalized an agreement with its dealers in China about how the vehicles it makes there will be distributed and sold.

Audi has been producing vehicles in China through an exclusive partnership with FAW Group. But last November Audi announced it had struck a second deal to build cars in China with Shanghai Automotive Industry Corp. and intended to sell the output through a second dealer chain.

Audi’s existing dealers protested, fretting that Audi might expand its dealer count and thereby dilute their own ability to increase volume.

Under terms of the settlement, all vehicles produced by the FAW and SAIC partnerships will be distributed through the existing sales group. But Audi also will restructure its sales system in China. Audi doesn’t expect to begin selling SAIC-built vehicles until January 2022.

In the meantime, Audi has agreed to pay its dealers in China an undisclosed amount of compensation for losses last year. Dealers claimed in February that Audi added too many dealers after vowing in 2012 to hike its sales in China to 1 million units through 580 dealers.

Audi sales in the country slipped in 2015 for the first time in more than 25 years. Last year the company sold about 492,000 vehicles through 530 dealers.