VW Agrees with Dealers on Lower Sales Targets in China

Volkswagen AG confirms it has reached accord with its dealers in China to set more realistic future sales targets for them, Bloomberg News reports.

Dealers representing several foreign makes in China have protested that overly ambitious sales targets and the discounts needed to achieve them as market expansion slows have bloated their inventories and driven many of them into financial losses. Working through the China Automobile Dealers Assn., they are demanding lower sales quotas and greater financial support from carmakers.

Earlier this month BMW AG agreed to pay its dealers in China 5.1 billion yuan ($815 million) in aid. Dealers representing Toyota are asking for 2.2 billion yuan ($352 million) in subsidies. CADA says several dealers have quit the business.

Last fall China's Ministry of Commerce announced it was studying a plan that would restrict carmakers' ability to dictate sales quotas and loosen their control over which brands dealers are allowed to represent.