BMW to Launch Huge Dealer Bailout in China

BMW AG has agreed to pay its dealers in China 5.1 billion yuan ($821 million) to offset the cost of their expanding inventories, Bloomberg News reports.

BMW dealer in Beijing

The China Automobile Dealers Assn., which represented dealers in the negotiations, says the subsidies will be paid by the end of February. Retailers had complained that BMW set unrealistic sales targets for 2014, thus blocking most of them from qualifying for year-end bonuses. CADA says talks continue about 2015 sales goals.

BMW has conceded that slower sales growth may be the "new normal" for China's auto market, even as the company prepares to double the number of locally produced models to six in the next few years, Bloomberg reports.

The news service says BMW sold 415,200 vehicles in China in January-November last year. The company currently operates in the country though more than 440 BMW and 100 Mini outlets.

BMW says it will help its dealers expand their earning capacity by introducing financial services and used-car operations.