Furious Chinese Hyundai Dealers, With Only One Car to Sell, Suing Automaker for $135 Million
Would you be furious if you invested millions to open a dealership, only for the manufacturer to supply just one vehicle with any sort of consistency? Of course you’d be.
That’s the problem some Hyundai dealers in China are facing now, who are in the unique situation of competing with another set of Hyundai dealers in the country. That’s a tall order: the only vehicle Hyundai supplies to those dealers on a regular basis is the Veloster hatchback. Now Hyundai has a Little Problem in Big China in the form of a $135 million lawsuit.
According to Reuters, two sales channels exist in China to sell Hyundai vehicles.
One sales channel, which has its own dealer network, is supplied by a local joint venture between Hyundai and Beijing Automotive Group (BAIC), called Beijing Hyundai Motor Co., Ltd. That channel sells Hyundais produced at its four plants in China, which the company plans to expand to six plants before the end of next year.
The other sales channel, which also has its own dealer network, only sells imported Hyundais supplied by the automaker in South Korea. Hyundai routinely supplies dealers with the Veloster hatchback, claims a dealer leading a $135 million lawsuit against Hyundai, but that’s it. Imports of other vehicles sold by the dealer network, such as the Genesis Sedan and Santa Fe XL, are infrequent.
“We sell cars, if you don’t give us cars, naturally we won’t be able to go on, we’ll close,” Wang Rongzhen, the dealer leading the charge, said in an interview with Reuters.
The Veloster is one of just a few vehicles that aren’t produced in China by Hyundai. Import dealers only account for 1 percent of Hyundai’s total sales in the country, claims Hyundai.
Because of these dire circumstances, half of Hyundai’s import-only dealer network has shuttered since 2014, claims the China Auto Dealers Chamber of Commerce, a group of dealers that are helping Hyundai’s import-only dealers with the lawsuit. Hyundai says its holding informal talks with the dealer network in efforts to come to an amicable solution.
The row between Hyundai and its Chinese dealer network occurs against the backdrop of slowing sales growth in the country over the last two years. BMW paid out $820 million to its cash-strapped Chinese dealers last year, reports Reuters.
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