BMW’s First Global 5S Store, Beijing Xingdebao, Shuts Down; Industry Winter Persists

Illustration: Chinese-made electric vehicles flooding the European market.(video screenshot)

People News– Beijing Xingdebao Automobile Sales and Service Co., Ltd., BMW’s first 5S store worldwide, recently posted an announcement stating it would close its doors, making it the first 5S store to go out of business. Due to the worsening economic environment and increased financial pressure, BMW terminated its brand authorization on October 20, 2024, resulting in a complete suspension of new car sales and after-sales services.

According to Radio Free Asia, even before its closure, Beijing Xingdebao showed signs of financial strain. Store employees reported that they hadn’t received their salaries for two to three consecutive months, and many car owners expressed concerns on social media about difficulties in refunding their stored balance. Some customers are organizing collective action to protect their rights.

On Monday, October 28, Hebei Shijiazhuang used-car dealer Sun Qiang told Radio Free Asia that adjustments by BMW and other foreign auto manufacturers in the Chinese market, including closing some 5S stores and withdrawing from price wars, are indeed related to the Chinese government’s long-standing strong support for electric vehicles. He said, “Yes, it’s very much related, because the state provides substantial subsidies for electric vehicles. Now, EVs are everywhere, while gasoline cars are rare.”

Mr. Sun added that in recent years, the Chinese government has provided extensive subsidies and policy incentives for the new energy vehicle sector, such as purchase tax exemptions, subsidized loans, and support for infrastructure. These measures have not only significantly boosted sales of Chinese-brand EVs but also intensified competitive pressure on more expensive foreign gasoline cars.

According to multiple media outlets, including Yicai, a notice posted at the Beijing Xingdebao Automobile Sales and Service Co. store on October 23 indicated: “Due to the impact of the overall economic environment, Beijing Xingdebao is currently under severe financial pressure. To better protect the interests of customers and employees, the group is actively seeking capital injection or other group-managed solutions to address the current difficulties. BMW brand authorization ended on October 20, 2024, and the company has suspended new car and after-sales services. In order to implement the capital injection or managed solution quickly, relevant data and customer rights have been consolidated per required procedures.”

Store Closure Sparks Customer Rights Claims and Refund Demands

After learning of the closure, hundreds of car owners began seeking to protect their rights due to fears of losing after-sales service and other benefits. Some owners were unable to obtain refunds for maintenance and repair prepaid balances, which range from thousands to tens of thousands of yuan. In addition, some consumers who had paid deposits are now unable to collect their vehicles. The display cars at the Xingdebao store have been removed, and dedicated personnel are on-site for customer registration.

Mr. Zhang, a car owner from Guiyang, told the station that competition in China’s automotive industry is fierce, and the government’s strong support for domestic car manufacturers has made it nearly impossible for foreign cars to survive. He said, “Now even car exports are being suppressed, and almost all fully foreign-owned cars are gone. Joint ventures are nearly gone, too. The Mitsubishi series is almost gone, Chrysler is virtually gone, and only a few remain from Nissan, Toyota, and Honda. They’re also offering three main series: gasoline, hybrid, and electric vehicles, but all are caught in this involution. Cars are cheap, but the cost of ownership is high.”

Industry Experts Warn of Potential “Domino Effect” Following Xingdebao Closure

According to 21st Century Business Herald, Zhang Xiang, Secretary-General of the International Smart Transportation Technology Association, believes that Beijing Xingdebao’s closure is due to multiple factors, including high operating costs and slow returns on new energy investments, along with fierce competition from domestic new energy brands. The collapse of such a flagship BMW 5S store could impact the confidence of other dealerships, leading to greater business risks.

Analysts point out that the closure of Beijing Xingdebao is just the tip of the iceberg in the industry’s crisis. In the first half of this year, over 50% of Chinese car dealerships reported losses, with the industry enduring a severe winter.

Further analysis confirms that Beijing Xingdebao’s closure is only a small part of the challenges facing the auto dealership industry. According to the 2024 National Auto Dealers’ Survival Report for the First Half of the Year from the China Automobile Dealers Association, 50.8% of auto dealers reported losses in the first half of this year, and nearly one-third of dealers achieved less than 70% of their sales targets.