BYD (HKG: 1211, OTCMKTS: BYDDY) shares took a hit in early Monday trading as the company began offering significant discounts on its product lineup, sparking concerns about increased competition in the market. The stock was down 6.53 percent in Hong Kong and 3.89 percent in Shenzhen at press time, reflecting investor unease about the potential impact of the price cuts.
The discounts, which apply to both the Dynasty and Ocean series, were announced on Weibo by the heads of BYD’s product divisions. For example, the Ocean series’ Seagull is now available for RMB 55,800, down from the original price of RMB 69,800. Similarly, the Dynasty series’ Qin Plus DM-i is now priced at RMB 63,800, discounted from RMB 79,800.
The decision to offer these discounts comes in response to a significant increase in dealer inventories in the first four months of 2025. According to analysts at Deutsche Bank, BYD’s dealer inventories grew by approximately 150,000 units during this period, equivalent to half a month’s retail sales. This surge in inventory levels has put pressure on dealers, prompting BYD to launch promotional campaigns to reduce stock levels.
Deutsche Bank noted that BYD’s ambitious sales targets for 2025, which include selling 5.5 million vehicles, have contributed to the buildup of dealer inventories. Despite this, retail volume growth in the first four months of the year was only 15 percent year-on-year, falling short of expectations.
The move to offer discounts could potentially trigger a price war in the mass-market segment, with competitors like Dongfeng Motor, IM Motors, and Leapmotor already announcing price cuts on their models. Dongfeng Motor reduced the price of its eπ 007 sedan by 9 percent, while IM Motors and Leapmotor also slashed prices on their electric SUVs.
Analysts believe that BYD’s discounting strategy may lead to further price competition in the Chinese market, prompting other automakers to follow suit. The risk of a price war looms large as companies vie for market share in an increasingly competitive landscape.
Overall, BYD’s decision to offer discounts reflects the challenges facing the company as it seeks to achieve its ambitious sales targets while managing dealer inventories. The impact of these price cuts on the market remains to be seen, but one thing is clear – the competition in China’s electric vehicle sector is heating up.
