Cars

BYD drops 100 dealers after sales disappoint

By Xiao Han (China Daily)
Updated: 2011-01-17 15:28

BEIJING - Following dealer pullouts last year, carmaker BYD has admitted its sales network grew too fast and has cut the number of dealerships by 100, domestic media said.

The report said Wang Chuanfu, board chairman of BYD, disclosed the information at the North American International Auto Show underway in Detroit.

Beginning in the middle of last year, a number of BYD dealers quit the company's network due to sluggish sales and high inventory.

The company set an ambitious goal at the beginning of 2010 to double its sales to 800,000 cars, but its performance was disappointing. In the first half the company only sold 289,000 cars. In August, it reduced its full-year goal to 600,000 units.

The report cited Wang as saying that it was a mistake to enlarge the retail network to meet the 800,000-unit goal.

BYD has greatly expanded its dealerships to more than 1,200 last year from some 600 in 2008, the report said.

Wang also noted the low standard the company set in its early days when choosing dealer partners, according to the report.

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Analysts said BYD's style of dealer expansion worked when the car market was at an early stage of development, but must change in a more mature consumer and business environment.

Salesmen could sell the first car, but reputation sells the second, and now it's time for BYD to sell that second car, the local automotive press said.

By the end of last year, BYD sold 520,000 cars, still falling short of its revised sales target. Its annual growth of 15.5 percent also lagged well behind the overall market, which grew 32 percent last year.

BYD estimates its 2011 sales will increase 10 percent to about 550,000 cars, and said the company will focus more on product quality, according to a previous report on Wall Street Journal's Chinese website.

The company said it plans to be listed this year on the mainland A-share stock market and raise 100 million yuan, the report said.

BYD is 10 percent owned by Warren Buffett's investment firm Berkshire Hathaway Inc and already traded publicly in Hong Kong.