China Grand Automotive Services Co., the country's largest publicly traded car dealership group, paid $1.1 billion (7.1 billion yuan) for 53.6 percent of Baoxin Auto Group amid a slowdown in sales that's spurring consolidation among China's dealerships.

 

China Grand's acquisition of Baoxin -- which distributes BMW cars in China -- took place on Dec. 4, according to a filing to the Hong Kong stock exchange.

 

The deal will give China Grand Auto access to Baoxin's dealer network at a time when slower growth in luxury sales is prompting premium carmakers and distributors to widen their geographic reach.

 

Gaining scale will also give the dealership group more bargaining power with automakers on everything from financial assistance to sales targets.

 

China Grand Auto had as many as 454 stores at the end of June, while Baoxin Auto operated 101 outlets. China Grand Auto said 52 of its outlets are "high-end brand stores," while Baoxin Auto has said it's the largest dealer of BMW-brand vehicles in China, according to statements of the respective companies in August.

 

Automakers have said China's sales will moderate as the economy expands at its slowest pace since 1990. Total vehicle sales, including trucks and buses, may increase 3 percent this year, according to the state-backed China Association of Automobile Manufacturers.

 

That contrasts with average annual growth of 36 percent in the past decade, according to Bloomberg Intelligence.

 

Volkswagen AG, BMW and other carmakers have paid financial assistance to dealers in the past year amid waning demand. Combined profit still plunged by 29 percent at the eight Hong Kong-traded Chinese car retailers in the first six months of the year, according to Bloomberg data.

 

Earlier this year, BMW agreed to give its Chinese dealers 5.1 billion yuan to help them cover their losses, while Toyota Motor Corp. gave 1.2 billion yuan. Volkswagen AG and its unit Audi also agreed to pay 2.2 billion yuan to its dealerships.