In recent years, the competition in the Chinese automobile market has become increasingly fierce, leading to a continuous rise in inventory pressure for car manufacturers. According to the annual report, BYD had an inventory as high as 116.036 billion Chinese yuan last year, ranking at the forefront of the industry. High inventory levels mean that a large amount of capital is tied up in unsold products, affecting the company’s liquidity, increasing financial costs, and even posing risks of depreciation in the rapidly evolving automotive industry.
Facing the competitive pressure brought by new car launches, several Chinese car companies have adopted a “one-price” strategy to clear inventory. As a leading enterprise in new energy vehicles, BYD, after launching its “Everyone Smart-Driving” strategy, had to initiate a “clearance sale” mode for multiple non-smart-driving models to cope with the increasingly fierce market competition.
Recently, BYD’s Dynasty Network and Ocean Network announced discounts on 10 non-smart-driving models, with discounts of about 10,000 yuan each, and the lowest starting price even entering the 50,000 yuan range.
Not only compact models but also mid-to-high-end models like Han DM-i and Tang DM-i in their non-smart driving versions have announced limited-time price reductions, with prices lowered by 10,000 yuan each. In addition, the MPV model BYD “Song” is offering up to 42,000 yuan in replacement subsidies, with the starting price lowered to the 200,000 yuan range.
In fact, the inventory pressure faced by BYD not only comes from strategic transformation but is also reflected in its financial statements.
According to the 2024 annual report, BYD’s inventory of 116.036 billion yuan ranks first in the industry, far exceeding SAIC Group’s 77.277 billion yuan, as well as the inventory levels of Great Wall Motors, Geely Auto, Changan Automobile, and others, which are all over tens of billions.
In terms of inventory turnover days, BYD has an inventory turnover days of 58.57 days, while Haima Auto ranks first with 149.96 days of turnover days, indicating a slow realization speed of its inventory.
High inventory has become a major challenge facing Chinese car companies. BYD recently launched 21 smart-driving models in a concentrated effort to gain an early foothold in the mid-to-low-priced intelligent driving market. However, with many companies following suit in their intelligentization strategies, a large number of new cars flooding the market, the non-smart-driving old models are being marginalized, further exacerbating the stockpile of inventory.
At a broader level, the slowdown in China’s overall economic growth, lack of consumer confidence, conservative consumption trends, and the increasing severity of inter-enterprise competition are background factors. Price wars have become the norm, profit margins are continuously being squeezed, and many car companies are even forced to sell vehicles at a loss in order to gain market share and cash flow.