China Yongda Automobiles Services Holdings Ltd. (3669), a distributor of luxury vehicles, said it aims to boost sales of Audi-branded cars by 14-fold in five to six years after signing an agreement with Volkswagen AG. (VOW)
Yongda this month signed an agreement with a unit of Volkswagen’s China joint venture, giving it priority to sell new models of Audi vehicles and take control of certain dealerships. The Shanghai-based company aims to sell 50,000 units of the brand annually by 2018 or 2019, up from 3,500 last year, according to Vice Chairman Wang Zhigao.
“The deal will have significant impact on our right to expand Audi sales network,” Wang told reporters in a briefing in Hong Kong today. “We will open Audi stores in China’s important cities and Audi will account for a bigger part of our business.”
Sales of luxury cars in China will likely outpace the projected eight percent to nine percent annual growth in the next three years despite a slowing economy and a crackdown on lavish spending by government officials, according to industry researcher Alix Partners Ltd.
Yongda received a license at the end of April to provide auto financing and the company expects the business to help boost sales, according to Wang.
The company will set aside about 1 billion yuan ($163 million) for the finance leasing business this year and in 2014, though Yongda doesn’t plan to sell a stake in the market to raise funds, Wang said.
Yongda’s sales volume in April and May rose at least 10 percent from a year earlier as carmakers controlled their output and the economy gradually improved, he said.
The car distributor posted a 6.9 percent drop in net income last year on weak consumer sentiment and an increase in distribution and selling expenses, according to a statement to the stock exchange in March.
The company plans to add 34 dealerships this year, selling brands including Tata Motors Ltd. (TTMT)’s Jaguar Land Rover and Bayerische Motoren Werke AG’s BMW vehicles, to the 106 stores it had as of the end of last year, it said last month.’’
Yongda is interested in selling electric vehicles and may contact Tesla Motors Inc., Executive Vice President Xu Yue said. The Chinese dealer is still in talks about distributing Maserati vehicles in China, it said.
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