BYD, a prominent Chinese automaker, has recently made significant changes to its production and expansion plans in response to slowing sales growth. According to a report by Reuters, the company has reduced shifts and output at some of its Chinese factories, as well as postponed the development of new production lines.
The measures, which have been implemented at at least four factories, include the cancellation of night shifts and a reduction in output by up to a third of the capacity. Additionally, plans for new production lines have been put on hold. These decisions indicate a potential slowdown in BYD’s previously strong sales growth, as the company faces increasing inventory pressures despite significant price reductions in the Chinese automotive market.
Sources familiar with the matter revealed that the measures were aimed at cost-cutting and were implemented after sales targets were not met. BYD currently operates seven car factories in China and had planned to increase sales by nearly 30 percent this year, aiming to reach 5.5 million units. However, the recent changes suggest a shift in strategy due to changing market conditions.
In 2024, BYD’s sales of new energy vehicles (NEVs) totaled 4,272,145 units, reflecting a 41.26 percent year-on-year increase. While the company had seen impressive sales growth rates in previous years, the latest figures indicate a potential slowdown in demand. In the first five months of 2025, BYD sold 1,763,369 NEVs, representing a 38.70 percent year-on-year increase.
To address the growing dealer inventory levels, BYD recently implemented widespread price cuts for its Dynasty and Ocean series models, sparking a price war in the domestic market. Deutsche Bank analysts attributed the price discounts to the rapid growth of dealer inventories, which had increased by about 150,000 units in the first four months of 2025.
In response to the high inventory levels, BYD is offering rebates to its dealers in China, providing RMB 666 ($93) per vehicle. The company’s dealer inventory levels are currently at 3-4 months, significantly higher than the industry average of 1.38 months. To alleviate the inventory pressure and maintain sales momentum, BYD is engaging in promotional activities to stimulate demand and reduce excess stock.
Despite these challenges, BYD remains a key player in the Chinese automotive market and continues to innovate in the electric vehicle sector. The company’s strategic adjustments reflect a proactive approach to market dynamics and a commitment to sustainable growth in an increasingly competitive industry.
