Volkswagen Group unit Audi said at the weekend it had agreed a deal with its dealers in China, effectively resolving a dispute over local joint ventures that could have disrupted its business in the world's biggest car market.

In a statement, the premium car maker said it had, along with China's FAW Group and local joint venture FAW-Volkswagen, "signed an agreement with the Audi dealer council for the future development of the Audi business in China".

But it did not rule out the previously announced deal with FAW's rival Chinese automaking group SAIC which had been the cause of the dispute: "The agreement is based on a common understanding of how the planned cooperation between SAIC and Audi will meet the interests of all parties involved.

"Audi AG, FAW Group and FAW-Volkswagen will implement the 10-year growth plan together with their dealer partners in order to develop business in China in a profitable and sustainable way."

Audi said it and "Volkswagen Group's long-held partner SAIC are in the process of evaluating a partnership for the production and distribution of Audi models and establishing data and mobility services. The aim of the strategic course is to develop the China business profitably for all parties involved. In addition to an extended product portfolio, the two-pillar strategy would provide the existing dealer network with vast synergies for their excellent after-sales infrastructure."

"This very constructive agreement is a strategic milestone for Audi's business in China," Audi sales and marketing chief Dietmar Voggenreiter said in the statement. "It paves the way for our two partner strategy and will allow us to further strengthen our commitment to China. Together with strong partners, we will shape the future of premium mobility in China by further extending our local product and service portfolio, ensuring an attractive business for all parties."

Audi said that, under the 10-year growth plan for the FAW-Volkswagen JV, it would widen its range of locally produced and imported models in China.

"The brand will continuously deliver highly attractive premium cars, future technologies and top service to customers in China. The cooperation in the field of electric mobility will be strongly expanded, thus driving forward the development of competencies in key technologies within the joint venture. In the next five years, the Audi brand at FAW-Volkswagen will bring five new e-tron models to market. To advance localisation, the collaboration in the field of tool making will be enhanced."

Audi said the agreement with dealers "incorporates the interests of the existing sales network into the new two-pillar strategy of Audi in China. All parties reached a mutual understanding that Audi models from a potential partnership between Audi and SAIC Motor would be sold through the brand's existing dealer network in China. In accordance with legal requirements, a new sales steering structure will be defined for the unified distribution of Audi products from two partners."

A Reuters report noted that the planned SAIC tie-up had riled Audi dealer operators who had said the partnership would cause current dealers to lose out to SAIC on access to key future products, hurting their sales and profitability.

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, the news agency noted.

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 news agency noted.

The dealers, in a letter to the automaker seen by Reuters at the time, urged Audi to consider their opinions and guarantee their rights before making a final decision.