GLOBALES: UPDATE 1-Audi resolves dispute with dealers in China - source
Reuters / (Adds detail, quote)

BEIJING May 20 Audi has resolved a dispute with its dealers in China that could have disrupted the luxury carmaker's business in the world's biggest auto market, according to a person with direct knowledge of the matter.

Volkswagen-owned Audi was set to make an announcement on its China dealer issue later on Saturday, the person said.

The problem had stemmed from Audi's decision to form a partnership with SAIC Motor Corp. Audi store operators, which currently sell Audi cars manufactured in China with FAW and those imported from Germany, objected to the move.

They said, among other complaints, current dealers would lose access to key future products to SAIC and disturbs their effort to maximize sales and profits.

On Saturday, the person with knowledge of the situation said Audi planned to announce that as part of the agreement with the dealer council the German premium brand agreed to distribute Audi models from the planned SAIC Audi collaboration only through the existing sales network.

The individual said the agreement was based on "a common understanding of how the planned cooperation between SAIC and Audi will meet the interests of all parties involved."

Audi and its current joint venture stakeholders "will implement a 10-year growth plan together with their dealer partners in order to develop business in China in a profitable and sustainable way," the person said.

An early entrant to China, Audi is the best-selling premium car brand although it is losing ground to newer models from Daimler's Mercedes-Benz and non-German automakers such as Toyota's Lexus and General Motor's Cadillac.

When discussions about a tie-up with SAIC came to light last year, Audi dealers said the Germany company had been slow to introduce new products, hurting sales growth, and causing them to lose money.

The dealers, in a letter to the automaker seen by Reuters at the time, requested Audi to collect their opinions and guarantee their rights before making a final decision. (Reporting by Norihiko Shirouzo; Writing by John Ruwitch; Editing by Louise Heavens)

GLOBALES: UPDATE 1-Audi resolves dispute with dealers in China - source

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