Renault defends China strategy after dealer criticism

By Samuel Shen and Kazunori Takada SHANGHAI (Reuters) - French carmarker Renault SA has responded to a letter from a Chinese dealer critical of its sales targets, offering help and support to local sellers of its cars and saying it was confident of their profitability in its expansion drive. The dealer, in a letter posted on the website of official newspaper People's Daily on Thursday, said the Dongfeng Renault Automotive Co joint venture had set lofty targets and forced dealers to buy more cars than they could sell, resulting in price cuts and heavy losses. It said 90 percent of the brand's local sales outlets were in the red in 2014. The complaint makes Renault the latest foreign carmaker to be targeted by Chinese dealers, in disputes over who should bear the brunt of a market slowdown. Growth of China's auto market, the world's biggest, halved to 6.9 percent last year. Earlier this month, China's dealers' association said it had persuaded BMW to pay 5.1 billion yuan (539.85 million pounds) in subsidies to dealers, while Porsche and Toyota Motor Corp <7203.T> are also negotiating with their Chinese dealers over subsidies and sales targets. In the letter, the Renault dealer called for a united front against Renault in a fight for what it said were realistic sales targets. The move came ahead of a dealers' conference later this month, where Renault is expected to set China sales targets for 2015. Renault said in an emailed statement sales at its one-year-old venture with Dongfeng Motor Group Co Ltd <0489.HK> had jumped 26 percent last year and noted its local dealers were at "the front line in the battle for China market share." But dealers are also independent business organisations that are vulnerable to market forces and Renault said it would offer support to those who suffer from "mismanagement and poor performance". Renault also said it plans to boost its sales network in China by 50 percent this year to capture a bigger chunk of the world's biggest car market. It aims to operate 150 outlets in China by the end of this year, compared with 100 now, the alliance partner with Nissan Motor Co <7201.T> said "As a newly-formed venture, our network expansion is not 'rapid' compared with other brands ... and we're confident over dealers' profitability," the carmaker said. The email made no mention of possible subsidies. (Reporting by Samuel Shen and Kazunori Takada; Editing by David Holmes)