Troubled BYD has even more problems: Dealers defect the Chinese car maker, because the alleged master of the electric vehicle has perfected one ancient tradecraft: The art of channel stuffing. A Beijing BYD store switched to another brand because BYD required them to carry a whopping six times the monthly selling rate on the lot. The poor dealer that moved 70 BYDs in a good month was sitting on a steadily restocked inventory of 400 units.
Even that generous inventory strategy did not help: In 2010, BYD’s sales grew only 15 percent, less than half the performance of the overall market.
Now a contrite BYD Chairman Wang Chuanfu swore to the Wall Street Journal that this won’t happen again. “Our objective now is to ask dealers to carry stock that is twice the monthly selling rate.”
The result of the strategy? “Because of the dealer inventory reduction and other changes to its strategy, BYD is forecasting even less sales growth this year,” says the Journal. “The company says it sees its sales growing only around 10% to roughly 550,000 vehicles in 2011, more or less on par with the 10 percent to 15 percent growth analysts predict for the China car market as a whole.” Given past performance and overfilled lots, even that target may be audacious.
To right the listing ship, BYD also plans to slow the roll-out of new cars (not good for sales) and spend more time on quality and styling (good for sales in about 5 years.)