During a slowdown in the Chinese economy, the People's Daily newspaper published a complaint letter from a Chinese automobile dealer on Thursday that is critical of the sales-target demands of France's Renault auto company.
The letter follows a formal complaint lodged by the China Automobile Dealers Association (CADA) earlier this month, and the missed 2014 sales projections of both Toyota and Honda, which were announced last week.
Described by President Xi Jinping as the "new normal," China's economy is displaying the slowest economic growth levels since the 1990s; however, the Chinese government has expressed confidence in the changed nature of its nation's economy, explaining that it represents more sustainable growth.
Greater competition has also been cited as an influential factor, while the Automotive News site conveyed that Japanese brands like Honda continue to deal with a 2012 "consumer backlash," after Japan nationalized a group of islands in the East China Sea that were the subject of a dispute.
In Thursday's complaint letter, the Chinese dealer claimed that unrealistic targets had been set by the Dongfeng Renault Automotive Co. joint venture, while dealers had been forced to take on car numbers beyond what they could turn over in sales. Price cuts and substantial losses were identified as consequences of the joint venture's practices.
According to the dealer's letter, 90 percent of Renault's sales outlets in the Chinese marketplace were in the red in 2014. Meanwhile, the Auto Blog said on Jan. 8 that, according to the CADA complaint, a mere 30 percent of China's car dealers are operating in the black--this figure was around the 70-percent mark in 2010. Price wars and indispensable incentives were cited by the association as the primary causes.
The French carmaker responded promptly in an emailed statement, saying that sales at the joint venture, which is one year old, had risen by 26 percent last year and, in recognition of the independent nature of China's car dealers, Renault will support ailing businesses.
The company also announced that it is seeking to expand the number of sales outlets it operates in China by 50 by the end of 2015, building upon the 100 it presently oversees.