BMW’s association of independent German vehicle dealerships urged its members to sign new long-term agreements with the automaker before a deadline at the end of the month to prevent disruptions to the sale of cars and spare parts.
The agreement came hours before a deadline that could have paralyzed distribution and service channels, and adhered binding assurances from the automaker that it would address the dealers’ outstanding concerns.
The automaker had proposed new terms to the dealers in August that would have left them with highly less income. The dispute with the dealers comes as worldwide trade tensions and tougher emissions standards are pressing BMW’s profitability.
“We recommend that our members sign the new contracts,” the leadership of the dealers’ association stated on Friday evening.
The association, which counts 550 independent dealerships, stated it would carry on discussions with the company to iron out remaining differences over the five-year contracts that will enter force on October 1.
The dealers account for an estimated 11 billion euros ($13 billion) of BMW earnings, while the automaker only directly owns 50 dealerships in Germany, the Sueddeutsche Zeitung reported this week.
BMW has stated its pretax profit would drop this year and slash its profit margin guidance for cars, blaming intense cost competition after the introduction of new emissions rules.