Kia Motors' Chinese dealers are demanding compensation for what they claim to be unfair business practices by the South Korean automaker's local distributor.
More than 100 dealers affiliated with Dongfeng Yueda Kia Motor have formed a working group to seek compensation for losses incurred due to overstocking of unpopular models.
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The group claims that Kia's approximately 500 dealers have booked losses of CNY5bn collectively over the last two years and are demanding the automaker compensate them the equivalent of CNY2,000 (US$292) per Kia-branded vehicle sold in 2016.
Chen Keyun, head of the working group, told local reporters that Dongfeng Yueda Kia also set unreasonably high wholesale prices which customers are not prepared to pay.
Kia is struggling to compete with domestic Chinese brands, which have made significant progress in improving quality and developing attractive, value for money products, and is finding it hard to justify its premium pricing in this market.
Kia dealers involved in the working group are now refusing to buy new stock until the distributor implements more favourable business policies.
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