BMW digs deep to compensate China dealers

Just how valuable is the China market to western car-makers? Germany's BMW has just agreed to pay out 5.1 billion yuan (€690 million) to its distributors in China to help cover losses after dealers stopped ordering cars from the manufacturer.

Believing the world’s biggest car market was due to keep growing at a similarly hectic pace last year as it had in previous years, BMW dealers in China overstocked their showrooms on expectations of rapid expansion.

However, car sales growth is expected to have halved to 7 per cent last year, while competition in the sector is increasing apace, and the dealers wanted compensation.

It is a big market for BMW – the luxury car-maker delivered 415,200 vehicles in China in the first 11 months of 2014, operating through a network of more than 440 BMW sales outlets and 100 Mini stores.

The payment is the largest by an car-maker to its retailers in China and will be paid by the end of February, according to Song Tao from the China Automobile Dealers Association. – (Bloomberg)