Sou Hu Cai Jing·2025-05-28 17:41Core Viewpoint - BYD officially responded to rumors regarding the financial troubles of its dealer, Jinan Qiancheng Automobile Trade Co., on May 28, 2025, denying claims of policy adjustments causing cash flow issues and attributing the financial problems to the dealer's own reckless expansion and leveraged operations [2][7]. Group 1: Company Response - BYD emphasized that its dealer policies have been consistent and stable over the past few years, refuting claims that policy changes led to cash flow pressures [2]. - The company has been assisting the dealer group since the end of 2024 by facilitating the transfer of some 4S stores to other local dealers and providing support to address customer service and employee placement issues [2]. Group 2: Background of the Incident - Jinan Qiancheng disclosed on April 17 that its financial troubles stemmed from two main pressures: frequent adjustments to dealer policies by BYD, which complicated cash flow management, and a tightening of bank credit due to a collective crisis among auto dealers in Shandong [7][10]. - The company had offered prepaid service packages, which resulted in over 500 customers facing issues due to store closures, including problems with vehicle registration due to the collateralization of vehicle certificates [8]. Group 3: Industry Context - The incident reflects the vulnerability of traditional 4S store models amid the transformation of new and old forces in the industry, with analysts noting that BYD's production-based sales model places high inventory pressure on dealers, exacerbated by declining terminal profits due to price wars [10][12]. - The China Automobile Dealers Association reported that dealer debt ratios are generally between 80% and 90%, with negative bank ratings increasing the risk of loan withdrawals, further deteriorating financial conditions [10]. - Industry experts suggest a shift to a sales-based production model to alleviate inventory pressure on dealers and call for financial institutions to adjust their risk assessment frameworks to avoid exacerbating industry turmoil [15].