China’s BYD has decelerated its manufacturing and growth efforts by cutting back on shifts at some of its Chinese plants and delaying plans to add new production lines, reported Reuters, citing two people with knowledge of the matter.
This adjustment comes as the company faces rising inventory levels and intense competition in China’s auto market, despite having overtaken Tesla in sales volume.
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The company, which sold 4.27 million cars in 2024, predominantly in China, has targeted a near-30% rise in sales to 5.5 million this year.
The production cut measures, which have not been publicly reported, have been implemented in at least four factories, with night shifts cancelled, and output decreased by a minimum of one-third of the capacity.
However, the exact scale of the reduction and the duration of these measures remain unclear.
According to sources, these steps are aimed at cost savings and were taken after sales failed to meet targets. BYD has not commented on the matter.
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By GlobalDataShares of BYD fell nearly 1% after the production cut news broke.
The China Association of Automobile Manufacturers’ data shows that BYD’s output growth has significantly slowed down in recent months, with the slowest pace since last February, when factory works were disrupted by the lunar New Year holiday.
The company’s recent price incentives have led to a broader selloff in Chinese auto stocks and triggered price cuts from rivals.
Dealerships are feeling the pressure, with BYD dealers holding an average inventory of 3.21 months, the highest among all brands in the country, while inventory level across the industry was at 1.38 months.
Earlier in June, the China Auto Dealers Chamber of Commerce had called on automakers to set “reasonable production” targets and to halt offloading excess cars on dealerships.
Amidst deepening price competition and increased regulatory scrutiny, Chinese automakers are seeking growth in overseas markets.
BYD has sold 1.76 million vehicles in the first five months of this year, with nearly 20% exported.
