Chinese electric vehicle champion BYD has slowed production and expansion in recent months, according to Reuters. The company has reduced shifts at some factories and postponed plans to add new production lines.

These decisions signal that BYD's strong sales growth of the past few years, which helped it surpass Tesla, may be slowing. BYD is now grappling with rising inventories even after implementing deep discounts in China.

In May, BYD launched aggressive discount programs for 22 models, with reductions of up to 7,390 USD. This move aimed to address the growing inventory at dealerships. However, inventory continued to rise, forcing BYD to cut production. These previously unreported measures have been implemented at at least four factories.

Cars on display at a BYD dealership in China. Photo: STCN

BYD, which sold 4.27 million vehicles in 2024, primarily in China, has at least seven car production plants in the country and had aimed to increase sales by nearly 30% to 5.5 million vehicles this year.

Data from the China Association of Automobile Manufacturers (CAAM) shows that BYD’s output growth slowed to 13% and 0.2% year-on-year in April and May 2024, respectively. This was the slowest pace since February 2024 when factory activity was disrupted by the week-long Lunar New Year holiday.

BYD began increasing monthly output from Quarter II 2023. But the trend reversed this year, with average output in April and May 29% lower than in Quarter IV 2024.

A survey by the China Automobile Dealers Association (CADA) in May found that BYD dealerships held an average inventory of 3.21 months, the highest among all brands in China, compared with an industry-wide average of 1.38 months.

As inventories rose, the China Auto Dealers Chamber of Commerce (CADCC) in early June urged automakers to stop flooding dealerships with too many vehicles and to set reasonable production targets based on sales performance. The chamber said the fierce price war was putting pressure on cash flow and eroding profits.

Chinese automakers are increasingly looking to overseas markets to bolster sales and offset the domestic slowdown. In the first five months of this year, BYD sold 1.76 million vehicles, of which about 20% were exported.

My Anh (according to Reuters)