China Hyundai dealers seek up to $135 million in compensation, claim automaker reduced supply

By Jake Spring and Hyunjoo Jin

BEIJING/SEOUL (Reuters) - A group of Hyundai Motor Co dealers in China is seeking 800 million-900 million yuan (92 million-103 million pounds) in compensation from the Korean automaker, saying Hyundai has cut the flow of models it exports to them, resulting in dealership losses and closures.

The group's leader, Wang Rongzhen, told Reuters on Wednesday that the automaker has scaled back the range of models it supplies to dealers in Hyundai imports in China, only consistently supplying one model, while steadily increasing car manufacturing in China.

"We sell cars, if you don't give us cars, naturally we won't be able to go on, we'll close," Wang said in an interview. The group seeking compensation represents 30 of the roughly 40 remaining imported Hyundai dealers in the country.

The Hyundai row is brewing as car dealers in China, sure-fire moneymakers for decades, have had a troubled transition to slower growth in the world's biggest auto market in the last two years. Many dealers are looking to manufacturers for support in soaking up losses: Germany's BMW AG agreed to pay out $820 million to cash-strapped dealers in early 2015. (http://reut.rs/29ZvKCc)

According to the China Auto Dealers Chamber of Commerce, which is helping to organise the dealers, Hyundai's import-only dealer network has already halved in size since 2014.

Hyundai said in a statement earlier this week it is keeping communications open in an effort to find a solution with the import-only dealers, noting that import dealers account for less than 1 percent of its sales in China.

The automaker sold about 1.1 million passenger vehicles in China in 2015.

(Reporting by Jake Spring in BEIJING and Hyunjoo Jin in SEOUL; Editing by Kenneth Maxwell)