China’s automotive industry has been engaged in a price war for several months, causing huge losses to car companies and car dealers. Following the bankruptcy of the well-known automotive dealer Yongao Group in Guangdong, the first global 5S store of BMW, Beijing Xindebao, recently announced its sudden closure.
According to a report from Jinfengjie on October 24, Beijing Xindebao, located in Beijing’s Chaoyang District, unexpectedly shut down, with a notice of closure posted at the entrance.
The notice from Xindebao stated, “Due to the impact of the overall economic environment, we are currently facing severe financial pressures. In order to better protect the interests of our customers and employees, the group is actively seeking solutions to the current dilemma through capital injection or other group trust schemes. The BMW brand authorization was terminated on October 20, 2024, and the company has suspended new car and after-sales related services.”
Consumers have revealed that they paid deposits of tens of thousands of yuan but were unable to receive their cars or get refunds, and the benefits they had prepaid for in the store have all been invalidated.
One consumer revealed, “I ordered a BMW i3 at Xindebao in June this year, with the contract specifying delivery by the end of August. However, the car was never delivered, so I requested a refund of the deposit from the store. They promised to refund within a week but instead, they disappeared.”
Public records show that Beijing Xindebao opened in June 2012, located inside the Fourth Ring Road in Chaoyang District, covering an area of 22,000 square meters with a total investment exceeding 320 million yuan. It was the first authorized new BMW 5S dealer in the world.
Reports indicate that back in July, BMW dealer Xiamen Zhongbao was exposed for delayed deliveries. It was rumored at that time that Xiamen Zhongbao was facing a crisis of broken financial chains due to poor management, leading to the inability to deliver vehicle qualification certificates pledged in banks to customers.
On September 10, Bank of China Fuzhou Cangshan Branch sued Xiamen Zhongbao to Fuzhou Cangshan District Court over “financial loan contract disputes.”
Xiamen Zhongbao has a close relationship with Beijing Xindebao, which has now gone bankrupt. Public records show that the shareholders of Beijing Xindebao Automobile Sales Service Co. Ltd. are Tianjin Tianbao Automobile Sales Service Co. Ltd. and Xiamen Zhongbao Automobile Co. Ltd. Both of these companies are linked to Beijing Zhongbao Zhuoyue International Trade Co. Ltd.
A leaked document revealed that BMW would terminate the authorization of Beijing Zhongbao Zhuoyue International Trade Co., Ltd. (G.A. Group) and its parent company on September 20, including 9 BMW 4S stores, 2 BMW quick repair stores, and 1 urban showroom, due to violations such as serious complaints related to qualifying certificates, overdue payments to BMW, and its affiliated companies.
According to the notice released by Beijing Xindebao, the final termination date of BMW brand authorization may be extended until October 20.
Singapore’s G.A. Group is one of the top five BMW dealers in China and also represents luxury car brands such as Ferrari, Porsche, and Maserati, covering cities like Beijing, Harbin, Xiamen, and Fuzhou.
Underneath the price war in China’s new energy vehicle market, major auto dealers, including BMW, are facing challenges, with reports of dealers going bankrupt repeatedly.
According to the Daily Economic News, the well-known automotive dealer Yongao Investment Group Co. Ltd. in Guangdong was reported to have closed down in January due to broken financial chains. The company owned over 80 brand stores, representing car brands including Audi, Volkswagen, Mercedes-Benz, BMW, Land Rover, and Jaguar.
According to the China Automobile Dealers Association survey data, in 2023, over 60% of dealers did not achieve their annual sales targets. Looking ahead to 2024, dealers expect fiercer competition this year, continuing to face challenges such as downward pressure on new car prices, high inventory pressure, tight funds, and low single-car profits.
In fact, the prolonged price war in the Chinese automotive industry has not brought the expected market benefits to foreign car companies in China but instead caused significant losses to the value of automotive brands. International luxury brands such as BMW, Mercedes-Benz, and Audi have withdrawn from the price war this year.