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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

Why BMWs are cheaper than Hyundais in Korea

Bloomberg reports shifting tariff regulations have upended the traditional automotive pecking order in Korea. Thanks to cheaper import taxes, foreign brands have seen market share jump from 28 percent to 41 percent over the last two years. BMW, Mercedes-Benz and Audi have all capitalized on the shift, with domestics like Hyundai and Kia suffering at the hands of their German rivals.
Taxes on European imports have fallen from 8 percent in 2011 to just 3.2 percent today. Over the next few years, tariffs will all but be eliminated for most imports, and taxes on US-made vehicles are expected to fall to just 4 percent in 2014. By 2016, that number will be zero. Needless to say, Hyundai and Kia are concerned about the shift.
Hyundai has seen profit fall by 15 percent last quarter, and the company says it is on pace to see the slowest sales growth since 2007. The company's shares have fallen by 12 percent. In order to stem the losses, Hyundai has discounted its midsize sedans and started working on diesel engine options.

Audi on Demand pilot program launches in San Francisco

Customers eager to drive a new Audi but unwilling or unable to plunk down the purchase price for one will be intrigued by the launch of the new Audi on Demand program. Initially being rolled out in San Francisco, Audi on Demand is based around an iPhone app that allows clients to order up a new Audi of their choosing on a day-by-day basis for up to 28 days in a row. Order an Audi through the app and a "personal concierge" will deliver the car anywhere in the city – curbside, driveway, parking lot, office building... pretty much anywhere the customer chooses. The concierge will even help set up the audio and navigation systems to the customer's preferences. And if the customer isn't there to receive the vehicle in person, he or she can simply unlock it through the app, start it up and drive off. The service is being made available on a broad range of Audi models, from the A4 all the way up to the R8. Customers can even specify a child seat or (on an Allroad or Q5) a ski or bike rack, and are guaranteed that the vehicle they select will be the one they get, right down to the color and trim. Though being launched at first only in San Francisco, Audi says it will roll out the program in other American cities "in the coming years." In announcing the program, Audi also revealed that it's planning to launch Audi at Home as well, a "micro-sharing" service that will allow residents of select condo complexes to share a fleet of Audis as well. These, of course, are just the latest smartphone-enabled conveniences being introduced by the German automaker, following its collaboration with Amazon and DHL for in-trunk delivery. Related Video: Audi launches innovative mobility program: Audi on demand April 27, 2015 | SAN FRANCISCO, California - Audi on demand launches beta program in San Francisco - Innovative premium service allows customers to choose their preferred Audi model via iPhone app - Personal concierge delivers vehicle to a San Francisco location of customer's choosing Audi today introduced Audi on demand, an innovative mobility program that gives customers a new way to experience the Audi brand and its range of vehicles at the touch of a button. With Audi on demand, customers can reserve an Audi by the day for up to 28 days. The premium service is currently available in San Francisco as part of a beta program and will be rolled out across additional U.S. cities in the coming years.