Traditional luxury brand dealers are struggling due to a sluggish market, while emerging brands are often criticized for overwhelming demand outpacing their production capacity.
Every family has its own challenges to face.
The first BMW global 5S dealership closes its doors
Event Overview: On October 23rd, Beijing's first global BMW 5S dealership—Beijing Xingdebiao—shut down. A notice posted at the entrance indicates that the dealership is currently facing serious financial pressure and is seeking capital infusion or other group management. Additionally, BMW's authorization was officially terminated on October 20th, leading to the suspension of both new car sales and after-sales services.
Commentary: This is not just an isolated incident of a dealer closing down, but rather a reflection of the intense competition in the Chinese automotive market causing declines in luxury brand businesses, thereby making it difficult for dealers of many brands, including BMW, to survive.
Regarding the closure of Xingdebiao itself, some opinions suggest that “the dealer group's mismanagement has nothing to do with BMW.” From our perspective, while it's important to draw a line, accountability should also be taken for the users who chose the BMW brand out of trust.
BMW Xingdebiao was the first 5S dealership in the world for BMW Group, launching on June 18, 2012, in Beijing. The additional "S" in 5S stands for "Sustainability."
Public records show that Beijing Xingdebiao is the holding company for Tianjin Tianbao and Xiamen Zhongbao, with the latter two companies being the holding companies for Beijing Zhongbao, which is in turn under Singapore's GA Group, one of BMW's five major agents in China in its early years. The closure of Beijing Xingdebiao is partly linked to financial pressure faced by the Singapore GA Group.
Before 2020, dealers enjoyed rapid expansion with massive investments. Dealer groups typically hold multiple brand franchises; for instance, the GA Group operates dealerships for brands such as BMW, MINI, Maserati, and Porsche. Following the pandemic, consumer spending has downgraded and fewer people are buying cars; the rise of domestic brands has pressured joint venture luxury brands into lower average prices. These factors have tightened the cash flow for many dealer giants, even leading to financial breakage.
GA Group's mid-term report indicated that revenue for the first half of 2024 was approximately HK$843 million, marking a 17.22% decline year-on-year. Among this, automotive sales revenue was about HK$569 million, down by 19.9% year-on-year; the company incurred a loss of approximately HK$18.23 million during this period, compared to a loss of around HK$3.784 million during the same time last year, further expanding its year-on-year losses.
According to BMW, on October 20th, the GA Group, to which Beijing Xingdebiao belongs, had its contract terminated by BMW. In response, some media interpreted this as “a good thing; the timely severing is BMW's pre-restructuring of the dealership system.” However, this raises the question: who will be responsible for those users who demand deposits?
A contributing factor to the dealers’ operational difficulties is the decline in BMW's business in China.
In the first three quarters of this year, BMW Group's global sales fell by 4.5% to 1,754,158 units, primarily due to a 13.1% drop in the Chinese market to 523,638 units, while sales in Germany fell by 5.1% and in the United States by 2.1%. The Chinese market is leading the decline.
In the face of persistently declining sales, a common practice among dealers is to reduce prices to increase volume.
In July of this year, BMW was reported to be experiencing severe losses in stores due to price wars, prompting BMW to stabilize prices by reducing sales from July onward, alleviating operational pressures on dealerships. Sales targets for dealerships were lowered by 15% in July. This move was seen as BMW exiting the price war to relieve dealership pressure and sparked considerable discussion. However, just a week later, BMW made headlines again as 4S dealerships refused to deliver vehicles.
Generally, in a poor market environment, to avoid bulk failures among dealers, manufacturers have only two options: one is subsidies from the manufacturer and the other is to reduce supply to maintain profitability. BMW chose the latter by “withdrawing from the price war,” aiming to relieve pressure while testing whether it could succeed without subsidizing dealers. Dealers' attitudes have been clear: orders placed before July at lower prices would not be delivered to customers unless they paid a higher price. After all, they cannot afford to lose money.
Beijing Xingdebiao undoubtedly also went through this phase.
The ultimate termination of authorization was a textbook action for mitigating losses, but the employees and customers at Xingdebiao still face an unavoidable path of rights protection.
Delay in delivery of Xiaopeng MONA M03 sparks dissatisfaction
Event Overview: Recently, several users who placed orders for the Xiaopeng MONA M03 in September expressed their discontent online, revealing that their vehicles, originally scheduled for delivery in December, have now been postponed to January 2015. This delay means they will miss out on local subsidies. Reports indicate that the delay in new vehicle deliveries has caused significant consumer dissatisfaction.
Commentary: As a mature new force in the automotive sector entering phase 1-10, Xiaopeng has yet to overcome capacity challenges. The MONA M03 is viewed as a crucial model for Xiaopeng to capture the market, described by He Xiaopeng during its launch as "the most thoroughly prepared car in history." Yet, just as the Xiaopeng team was reveling in the excitement of 30,000 orders within a week of the launch, capacity issues pulled them back to reality.
Since September, various regions including Sichuan, Shandong, Shanghai, and Anhui have introduced or updated policies to support automobile replacement, leading to a hot sales launch for the MONA M03, which achieved over 10,000 deliveries in its debut month, setting a record for first-month deliveries among new force pure electric sedans. However, as order volumes continued to grow, some users seeking local car purchase subsidies began to voice their dissatisfaction.
For instance, one user who locked in their order on September 26 was informed that their initial delivery date of December 26 had been pushed to January 20.
Xiaopeng's official WeChat mini-program reveals that the delivery timeframe for the 515 long-range version is currently 9 to 13 weeks, the 620 ultra-long-range version is 13 to 17 weeks, and the 580 ultra-long-range MAX version is expected to commence deliveries after the 2025 Spring Festival. This implies that even users who locked in their orders in early September may not receive the vehicle in time for this year's local replacement subsidy, with some users potentially “losing 20,000 yuan.”
In response, Xiaopeng stated that the delivery delays are caused by differences in supply capabilities among the various motor and battery suppliers used in each version of the M03.
The compensation plan offered by Xiaopeng for users facing delivery delays includes awarding 1,500 points per day, but this has not alleviated user dissatisfaction. One user indicated that, based on Xiaopeng's compensation plan, if delivery is delayed by one month, they would receive 45,000 points—equivalent to 4,500 yuan—while missing out on 11,000 yuan in local purchase subsidies for the year. This situation is not uncommon.
Moreover, some local subsidies come with restrictions: one is a deadline, and the other is that subsidies will stop once allocated funds are exhausted, creating additional uncertainty.
Nonetheless, while the delivery capacity for the MONA M03 has indeed not reached a satisfactory level, legally speaking, Xiaopeng Auto has not breached any contracts. A breach of contract occurs only when the contract explicitly states a promised delivery date and it is not met within that timeframe. Although users can check estimated delivery dates in the app, this serves only as a reference, as the vehicle delivery details specify that the exact delivery date will be communicated in writing.
