Automotive company BMW will pay 5.1 billion yuan ($US820 million) to disgruntled auto dealers in in China who complained that the cost of overstocked showrooms must be shared.
The luxury car maker is facing cutthroat competition: for example, it’s range of 7-series limousines are competing with the Mercedes S-class and have been in the market since 2009.
“This is the biggest such subsidy we’ve had in China … because last year, dealers had the highest level of stockpile,” said Song Tao, deputy secretary general of the China Automobile Dealers Association (CADA).
Another automotive company, Toyota Motor Corp, is also negotiating with its auto dealers in China who complained that they have to put up with too much stock which has led to huge losses.