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Automakers paying Chinese dealers for lower-than-expected sales

The Chinese dealers vs. foreign manufacturers story won't quit. It began with a story on the struggles faced by FAW-Toyota joint venture dealers, with supposedly 95 percent of the showrooms losing money, and 10 percent of them doing so poorly that they'd have to exit the business. The problem is mandated sales targets, most set when the country's economy was racing. Now that things have slowed, China's dealers are swimming in unsold cars and the costs to keep them. In the case of FAW-Toyota, dealers asked Toyota to hand over 2.2 billion yuan ($355 million) to help address the situation. That was followed by a report noting the issues that Honda, BMW, and Nissan dealers are having with the same issue, revealing that the Chinese Automobile Dealers Association (CADA) had taken the highly unusual step of writing to the Chinese government to complain. Now Reuters reports that CADA is not only pressing its case even harder, it's being open about it: it announced that BMW agreed to pay dealers 5.1 billion yuan ($820 million) to alleviate poor profits last year. Unnamed sources said Audi has thrown 2 billion yuan into the kitty for subsidies, and Daimler has contributed "about 1 billion yuan" to its dealers. The battle isn't just about 2014, but how business will be run in 2015 as well: Chinese Porsche dealers have requested the automaker lower its 2015 target of 64,000 cars, which would be a 40-percent increase on its 2014 sales of 46,931 vehicles. One analyst called it "shocking" that the CADA has taken its fight public, while CADA comments continue to imply that dealers have been railroaded to the cliff's edge without recourse. "Due to the difference in status," it's deputy secretary said, "individual dealers are not willing to, or don't dare to, talk frankly with the carmakers...." Both parties need one another, so they'll figure out a way to make it work – but that could mean acknowledging the Chinese market is behaving more like a mature one, not an emerging one. News Source: ReutersImage Credit: Lintao Zhang/Getty Images Earnings/Financials Audi BMW Porsche Toyota Car Dealers Luxury

300-HP 2013 Audi S3 Sportback unwrapped

Not content to let Volkswagen have all of the fun with its GTI and Golf R, Audi is rebooting its five-door S3 Sportback with rather monstrous power. Headed for an official unveil at this year's Geneva Motor Show, the new S3 rolls out with a 300-horsepower, 280-pound-feet of torque turbocharged 2.0-liter TFSI engine under the hood. The four-cylinder powerplant is strong enough to shove the Sportback to 62 miles per hour in just 5.0 seconds when connected to the optional S-Tronic gearbox, or 5.5 seconds with the traditional manual transmission. Top speed is said to be an electronically governed 155 mph. Almost as impressive as those performance figures are the fuel economy ratings: the S- S3 is said to average 34 miles per gallon.
All S3 Sportback models offer Quattro all-wheel drive, ride on a sport-tuned suspension tuned to a lower ride height (about one inch) versus the standard Audi A3. 18-inch wheels with 225-section tires are standard equipment, and 13.39-inch front brakes should offer serious stopping ability.
Audi has done a lot of work shedding pounds from this latest MQB-architecture S3, as well. The car has a curb weight of roughly 3,186 pounds, or some 154 pounds less than the outgoing model. 11 of those pounds were cut via weight-saving measures in the 2.0-liter engine.

Audi investing $30.3 billion through 2018 for product expansion

How does Audi plan to reach two million units in annual sales and pay for the 11 new models it's adding to its lineup - an expansion that may include models named SQ2, Q9 and F-Tron? By increasing its investment to 22 billion euros ($30.3 billion US) between now and 2018. That figure represents an increase of about 500 million euros over the previously planned outlay, according to a report by Automotive News, and that could be due to Audi wishing to goad the momentum that pushed it to 1.5 million annual sales two years ahead of schedule.
It's also about staving off the challenges from BMW and Mercedes-Benz. Now that BMW has been able to turn some of its attention away from its "i" series of Megacity cars, it will reportedly spend more than planned in 2014 as it continues the rollout of ten all-new vehicles and 15 new-generation vehicles through the end of next year. Mercedes, having been dropped to third in the sales race, is preparing to add 13 new cars over the next six years.
Audi's money is going into technology, into product like the next-generation TT and the Q1 and production expansions and upgrades all over the world. The expenditure represents just under a fourth of Volkswagen's 84.2 billion-euro ($115.7 US) outlay devoted to taking the number-one global automaker title away from General Motors and Toyota by 2018.