The price war in the mainland auto market is escalating. According to reports from domestic media, the capital chain break incident of BYD (01211.HK)(002594.SZ) core dealer Qiancheng in Jinan, Shandong Province, is continuing to develop. Due to financing difficulties, at least 20 4S shops located in Jinan, Weifang, Tai'an, and Dezhou have experienced situations of abandoned premises and suspended operations. The report also indicates that consumer-prepaid three-year insurance fees, maintenance packages, vehicle film, chassis guards, and promised lifetime maintenance and painting services cannot be fulfilled, triggering widespread rights protection actions and questioning BYD's brand regulatory responsibilities.
BYD has responded to rumors regarding the dealers' capital chain break, stating that the information circulating online is untrue. It pointed out that the company's policies for dealers have been consistent and stable over the past few years, but these dealers blindly expanded rapidly and leveraged their operations, leading to problems with the capital chain. Since the end of last year, some 4S shops of this dealer group have been acquired by other local dealers. BYD also stated that the company is providing alleviation support to assist in addressing related customer and employee issues.
