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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

McLaren rules out Porsche Cayman competitor

McLaren has gone downmarket with the introduction of its new Sports Series, but don't expect it to go any lower than that. So while the 570S goes up against the Audi R8 and Porsche 911 Turbo, the likes of the TT and Cayman can rest easy. Speaking with Autocar, McLaren designer Robert Melville ruled out the prospect of developing a sports car positioned lower than the Sports Series. Melville dismissed the idea of a Cayman rival from Woking as "a step too far" and "not exclusive enough" for McLaren. "You look at Ferrari. They are coming from very high end. [The 570S] is stretching us down to R8s and 911s and is as low as we'd want to come." The limit may be dictated, more than anything, by the building blocks. The newly introduced Sports Series adopts the same essential hard points as the higher-end Super Series (650S) and Ultimate Series (P1). Like its more expensive siblings, it features a 3.8-liter twin-turbo V8 mated to a seven-speed dual-clutch transmission and bolted to the back of a carbon monocoque chassis. Only instead of selling for $265k like the 650S or over $1 million like the P1, the 570S will retail for under $190k. Volume is how the manufacturer aims to make up the difference. In fact McLaren stands to generate as much revenue (if not necessarily the same profit margin) selling 2,500 units in the Sports Series each year as it has producing all 375 examples of the P1. Making those same building blocks available at a lower price point – or developing an entirely new set – would be an entirely different proposition... one which McLaren is evidently less than keen to undertake. So while we can look forward to new versions of the Sports Series to follow – including Spider and GT variants soon to follow – more commonplace stablemate appears to be off the table. Related Video: Featured Gallery 2016 McLaren 570S: First Drive View 34 Photos News Source: AutocarImage Credit: Copyright 2015 AOL McLaren Porsche Performance Supercars mclaren 570s mclaren sports series

Audi CEO's Dieselgate arrest threatens fragile truce among VW stakeholders

FRANKFURT — The arrest and detention of Audi's chief executive forces Volkswagen Group's competing stakeholders to renegotiate the delicate balance of power that has helped keep Audi CEO Rupert Stadler in office. Volkswagen's directors are discussing how to run Audi, its most profitable division, following the arrest of the brand's long-time boss on Monday as part of Germany's investigations into the carmaker's emissions cheating scandal. The supervisory board of Audi, meanwhile, has suspended Stadler and appointed Dutchman Bram Schot as an interim replacement, a source familiar with the matter said on Tuesday. Schot joined the Volkswagen Group in 2011 after having worked as president and CEO of Mercedes-Benz Italia. He has been Audi's board member for sales and marketing since last September. The discussions risk reigniting tensions among VW's controlling Piech and Porsche families, its powerful labor representatives and its home region of Lower Saxony. VW has insisted the development of illegal software, also known as "defeat devices," installed in millions of cars was the work of low-level employees, and that no management board members were involved. U.S. prosecutors have challenged this by indicting VW's former chief executive Martin Winterkorn. Stadler's arrest raises further questions. Audi and VW said on Monday that Stadler was presumed innocent unless proved otherwise. Munich prosecutors detained Stadler to prevent him from obstructing a probe into Audi's emissions cheating, they said on Monday. Stadler is being investigated for suspected fraud and false advertising. Here are the main factors deciding the fate of Audi. Background: Audi's role in Dieselgate Volkswagen Group was plunged into crisis in 2015 after U.S. regulators found Europe's biggest carmaker had equipped cars with software to cheat emissions tests on diesel engines. The technique of using software to detect a pollution test procedure, and to increase the effectiveness of emissions filters to mask pollution levels only during tests, was first developed at Audi. "In designing the defeat device, VW engineers borrowed the original concept of the dual-mode, emissions cycle-beating software from Audi," VW said in its plea agreement with U.S. authorities in January 2017, in which the company agreed to pay a $4.3 billion fine to reach a settlement with U.S. regulators.