BYD Slumps After Scaling Back Production, Rising Inventories, Slower Sales Growth

BYD stock and its U.S. listed ADRs slumped about 3% on Wednesday this week, after it was reported the vehicle manufacturer was cutting production.

China’s top automaker is scaling back production at several factories due to rising vehicle inventories and slower-than-expected sales growth, multiple outlets including Reuters and CarNewsChina reported.

The company has canceled night shifts and delayed adding new production lines, reducing output at at least four factories by about one-third. “There were two reasons for the mentioned actions: saving costs and failing to meet targets,” two sources told Reuters.

In May 2025, BYD launched aggressive discounts across 22 of its models, slashing prices by as much as 53,000 yuan (USD 7,390) in an attempt to ease dealership backlogs. However, inventories continued to rise despite the deep price cuts. A major dealer network in eastern China even suspended operations, partly due to unsold stock.

According to a May 2025 survey by the China Automotive Dealer Association, BYD dealers held an average of 3.21 months of inventory—more than double the national brand average of 1.38 months—making it the highest among all carmakers in the country.

The report continues, saying production is also showing signs of strain. Although BYD’s domestic sales rose 11% year-over-year to over 1.15 million vehicles from January to May, and exports more than doubled to 374,200 units, data from the China Association of Automobile Manufacturers (CAAM) showed production growth had nearly stalled at just 0.2% in May.

Despite these challenges, BYD set a record for car registrations in China during the week of June 16–22, hitting 83,400 units—an 18.6% increase from the prior week and nearly 25% higher than the same week in 2024. In total, the company registered 208,550 vehicles in the first three weeks of June.

We’ve noted over the last year that BYD has been the tip of the spear in Chinese auto manufacturing becoming more popular globally.

Over the past year, BYD has emerged as the dominant force in the global auto market, overtaking Tesla in Q4 2024 as the world’s top seller of battery-electric vehicles.

Its total sales reached 4.27 million in 2024—a 41% jump—driven by aggressive pricing, a strong domestic lead in China, and surging exports, which more than doubled to over 417,000 units. BYD’s vertically integrated supply chain and wide model lineup, including the best-selling Seagull and Atto 3, gave it a cost and production edge.