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Audi insists on right to launch a 2nd dealer network in China
Automotive News China | 2017/5/16

Audi AG is backing away from an agreement with its China dealers that the company will not launch a second distribution network in the country.

Audi informed its dealers' association that the tentative accord, announced on March 28, is "not feasible," the association said last week. 

The dealer group added that Audi's notification was shocking and regrettable. 

Audi's reversal prolongs its standoff with dealers and adds to the uncertainty about its prospects in China. 

The feud was kindled last December when Audi signed a tentative agreement to allow VW's joint venture with SAIC Motor Corp. to assemble its vehicles and sell them through a new dealership network.

Audi was counting on the second distribution channel to fend off rivals BMW AG and Mercedes-Benz. But the move enraged Audi's current Chinese dealers, who are affiliated with Volkswagen's partnership with China FAW Group Corp. 

They fear that a second dealer network will siphon away sales. To protest the move, dealers stopped ordering new vehicles and Audi sales plunged.

Audi has been dethroned from its long-held position as China's largest luxury brand this year, with local sales slumping 18 percent year on year to 154,873 vehicles in the first four months.

Mercedes-Benz' China deliveries increased nearly 37 percent year on year to 192,574 units, while BMW's China sales jumped 18 percent to 191,697 vehicles.

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