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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

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.

BMW's plans for next plug-in i model, due after 2020

BMW entered the fight in the green car ring with gusto thanks to the one-two punch of the i3 and the i8. However, it seems that there could be a wait ahead before the German's i sub-brand is ready to land another strike at the market. "We are still in the strategic research phase where we brainstorm," Klaus Frohlich, BMW Group development boss, said to Automotive News Europe about the future vehicle. He indicated the next new model to bear the i prefix wouldn't arrive until after 2020. Frohlich also underscored that the sub-brand's products wouldn't be based on a standard BMW product. The German brand was at one point rumored to have a model called either the i5 or i7 on the way that would have added a plug-in hybrid drivetrain to the 5 Series. Frohlich's statement would seem to invalidate that possibility. Although, there's nothing stopping the vehicle from carrying regular BMW branding in the vein of the X5 xDrive40e PHEV. The current i-badged models won't just stagnate on the market in the meantime, though. "We have a minimum 20 percent battery density improvement every three years, thus over the i3 and i8's life cycle, we will offer more performance, more range or a combination of the two," Frohlich said to Automotive News Europe. Sadly, current owners won't be able to upgrade to the improved parts, though. Rumors about a third i sub-brand model go back years with much of the talk swirling around the i5. In addition to the speculation about a 5-Series-based version, there was also supposed to be a stretched variant of the i3 with that name, possibly even with a hydrogen fuel cell version. Although, BMW claimed the vehicle was purely "hypothetical." Related Video: