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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

BMW 1 Series prototype packs direct water injection

Just a few months ago, BMW showcased an M4 that was modified to serve as the safety car for the MotoGP racing series. The flashing lights and emergency equipment, however, weren't the only modifications BMW made to the performance coupe. It also packed an innovative new water injection system. And now it's furthering the development of that system by running it in a 1 Series hatchback as well. Revealed at the BMW Group Innovation Days 2015 event, this five-door 1 Series packs a three-cylinder gasoline engine – like the one found in a Mini or i8 – but fitted with the direct water injection system. In this application, the system sprays a fine mist of water – yep, regular old H2O – right into the combustion chamber. While mixing water with gasoline normally wouldn't be recommended, in this case it evaporates immediately and helps cool the engine from the inside, allowing it to run at higher efficiency. That cooler running engine brings with it several benefits. It delivers improved fuel economy and lower emissions, to start. It also allows for an earlier ignition point, higher compression ratio, and higher boost pressure in turbocharged engines, delivering increased output. It even cuts down on engine knocking (where combustion occurs spontaneously), reduces wear and tear on the engine, and makes better use of lower octane levels. If that sounds like a win-win-win... win (we're losing count of all the wins here), it's because BMW just may be on to something. Of course it does require a water tank to be fitted on board, which means added weight, but instead of requiring the driver fill up the water tank, BMW has fitted this prototype with a system that replenishes the water level from the air conditioning system when the vehicle is switched off. So unless it's being driven in a particularly extreme climate, it doesn't even need topping up. Add one more "win" to the list, then. Extra power, improved real-world fuel economy: Direct water injection enhances efficiency. With direct water injection for turbocharged petrol engines, the BMW Group has again succeeded in enhancing the capabilities of conventional engine technology through an ongoing process of refinement and improvement. The precisely controlled injection of water into the engine cylinders produces a cooling effect that boosts power and torque, particularly when operating at or near full throttle, while at the same time reducing fuel consumption and emissions.

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Discussion Topics for Autoblog Podcast Episode #334
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