BYD dealerships collapse in China as EV market pressures mount

BYD dealership closures in Shandong and Liaoning reflect deeper challenges in China’s electric vehicle industry.

A view of a BYD car showroom in China. Photo by Bob Henry/UCG

By Alana Salsabila and Widya Putri

China’s intensifying electric vehicle (EV) competition has taken a sharp toll on traditional car dealership models, as evidenced by the recent collapse of two major BYD retailers. These BYD dealership closures in China, spanning two provinces, offer a stark warning that even aligning with the nation’s top-selling brand provides no guarantee of financial security.

In Liaoning province, Xingqi Group, a once-active dealer of BYD cars, has ceased operations entirely, halting vehicle deliveries and service provisions to more than 60 customers. This information, reported by Liaoning Radio and Television Station, underscores the vulnerability of even large-scale auto retailers. Meanwhile, in Shandong province, more than 500 aggrieved customers have formed online groups demanding compensation from Qiancheng Holdings. This company, which previously ran around 20 BYD showrooms, has also reportedly shuttered all its operations, according to Autodealer's May 6 report.

These BYD dealership closures in China point to growing instability in the retail side of the EV business. Once buffered by strong sales volumes and government incentives, many dealerships are now grappling with a new reality shaped by slowing consumer demand, rising inventory levels, and a shift toward direct-to-consumer sales models.

Transition to EVs disrupts dealership economics

The shift from internal combustion engines to electric drivetrains is reshaping the entire automotive ecosystem in China. One of the most direct impacts is the reduction in after-sales service demand. Electric vehicles, with fewer moving parts and less maintenance required, diminish a crucial revenue stream for traditional dealerships.

Compounding the problem, EV manufacturers like BYD are increasingly adopting direct-to-consumer strategies, bypassing traditional dealers altogether. As a result, many dealership networks are becoming obsolete or financially unsustainable.

This disruption is not just theoretical. According to recent data from Cui Dongshu, secretary general of the China Passenger Car Association, the nation's auto stock levels reached 3.5 million units in April—equivalent to 57 days of inventory. This is the highest figure recorded since December 2023 and a sign that sales are not keeping pace with production.

BYD’s dealer policy shifts and mounting debt

Qiancheng Holdings attributed its financial difficulties to changes in BYD’s dealership policies over the past two years. In a letter circulated on social media dated April 17, the company explained that policy adjustments had created severe cash flow challenges. Moreover, the collapse of other dealerships in the region had caused local financial institutions to tighten lending, further restricting Qiancheng’s ability to stay afloat.

Despite repeated attempts, Bloomberg was unable to reach representatives from Qiancheng Holdings or Xingqi Group for comment. BYD Co., the manufacturer behind China’s best-selling EVs, also declined to respond.

The silence is doing little to comfort affected customers. One woman based in Jinan, the capital of Shandong province, recounted purchasing a BYD Seagull from a Qiancheng dealership last June. The deal came with a promise of lifetime servicing and an insurance package worth 10,500 yuan (approximately $1,500). When she returned this year to renew her insurance, the dealership had vanished.

She attempted to contact BYD’s customer hotline but received no resolution. Due to privacy concerns, she asked not to be named.

Inventory overload following tech upgrade

The rollout of BYD’s new advanced driver assistance system, known as “God’s Eye,” in February has added another layer of stress to its retail partners. The technology, which is now standard in most new BYD models, prompted a wave of inventory clearance among dealerships. Existing stock of older models became obsolete overnight, forcing dealers to move vehicles quickly before they lost even more value.

This led to aggressive discounting. BYD dealers slashed prices by thousands of yuan in a desperate bid to free up space and maintain cash flow. According to data from the China Automobile Dealers Association, BYD inventory levels in January ranked as the third highest across all automotive brands.

Consumer backlash and long-term implications

The fallout from these BYD dealership closures in China is rippling across consumer circles. Online forums and social media platforms are filling with complaints from stranded customers seeking insurance refunds, service guarantees, and answers from a silent BYD corporate office.

Many of these grievances point to a deeper problem: a disconnect between the manufacturer’s ambitious growth strategy and the realities faced by its retail partners. The company’s push to innovate rapidly, expand market share, and stay ahead of competitors has often left dealerships scrambling to keep up.

As the EV market matures, this disconnect could become more pronounced. Dealers may continue to close if they cannot adapt to new sales models or absorb financial hits from rapid inventory turnover and shrinking service revenues.

China's EV boom hides a fragile foundation

China remains the world’s largest EV market, and BYD is a major player, consistently outperforming competitors such as Tesla in terms of unit sales. However, the failure of multiple BYD dealerships suggests that this success comes with significant cost—particularly at the grassroots level of retail distribution.

These closures raise important questions about the long-term sustainability of EV sales networks in China. If the retail foundation crumbles, it could create bottlenecks in the broader supply chain, impact customer satisfaction, and ultimately hurt brand reputations.

No safety net, even for top brands

That dealerships selling China’s top EV brand have gone under is a powerful sign that no company is immune to the sector’s pressures. BYD’s dominance may shield it in terms of market perception, but the people and businesses tasked with delivering its products to consumers are facing unprecedented financial challenges.

Without structural changes in how EVs are marketed, sold, and serviced, more dealership closures could follow. The future of China’s auto market may be electric—but for now, it is also precarious.

As China continues to push for electrification, these BYD dealership closures in China offer a sobering look at what lies beneath the surface of a booming industry: financial strain, uncertain consumer support, and a retail model in desperate need of reinvention.

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