[SINGAPORE] China electric vehicle (EV) giant BYD’s move to distribute its own vehicles in Australia could be the prelude to a similar strategy in South-east Asia – a move that would boost its margins, but hurt the dealer ecosystem.
In May, BYD said it would take over distributorship of its vehicles in Australia from current appointee EV Direct, which had been its distributor there since 2022.
Australia has become a major regional market for BYD. The brand sold 20,458 cars there in 2024 – up 65 per cent year on year. It aims to sell 50,000 in 2025.
As direct distributorship can boost revenue and expedite its ambitious export goals, BYD might do the same in South-east Asia.
But what helps BYD may hurt dealers, as the carmaker takes distributorship profits away from automotive retail groups.
Automotive distributors act as middlemen between manufacturers and dealers, helping carmakers navigate the complexities of each market.
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Distributors in each market decide what models to sell, how to price them, and how to market and brand them. Dealers then sell the cars.
As distribution and dealership overlap, larger automotive groups often do both.
In South-east Asia, BYD’s third-party distributor-dealers include AC Motors in the Philippines, Sime Darby subsidiaries Vantage Motors in Singapore and Beyond Auto in Malaysia, and Rever in Thailand.
Distributors make a margin of around 10 to 15 per cent on each vehicle, and even more for premium models. If carmakers handle distribution themselves, they can earn that margin instead – which is why many do so.
Most Japanese and Korean brands self-distribute in their major regional markets. Toyota, for instance, does so in Australia, where it sells more than 200,000 cars a year.
Need for speed
Direct distribution may also make it easier for BYD to adopt aggressive sales tactics in pursuit of export sales.
While the Australia move was not itself a surprise, its timing was, with the takeover reportedly coming a year ahead of schedule. BYD’s export targets might explain the rush.
In 2024, it sold around 4.3 million vehicles. This included around 430,000 in exports, of which some 100,000 were in the Asia-Pacific.
This year, it aims for significantly more: 5.5 million total sales, with 800,000 exports. By 2030, BYD aims to sell half of its cars outside of China.
With China’s major carmakers now shifting their focus to export sales, BYD will be looking to capitalise on its leading-brand status to win market share abroad as quickly as possible.
Doing so may entail using aggressive tactics, which not all third-party distributors are able to stomach.
It is not unheard of for distributors to disagree with a manufacturer’s business approach, preferring instead to stick to proven strategies or to prioritise dealers’ needs.
By doing its own distribution, BYD can avoid such friction.
Even before the latest move in Australia, BYD had made forays into this area. Last July, it bought a 20 per cent stake in its Thai distributor, Rever, allowing it to gain experience in distribution, and paving the way for a direct approach if necessary.
BYD also became its own distributor of its premium brand Denza in Singapore last October, then in Australia in February 2025.
Deal with it
But as the EV giant accelerates, dealers might suffer – as is already happening in China.
In April, two major BYD dealer groups in China – Xingqi Group and Shandong Qiancheng Holdings – went out of business, affecting at least 20 dealerships and more than a thousand customers.
Reuters reported that Qiancheng at one point had an annual turnover of three billion yuan (S$536 million) and employed 1,200 people.
Media reports said that the closures were a result of saturation in China’s EV market; dealer revenue falling as EVs require less aftersales service; and BYD forcing its dealers to take on high levels of stock, some as pre-registrations.
While the Asia-Pacific’s EV market is still fast-growing and not as mature as China’s, the latter two factors are very much relevant to the region.
Pre-registration is the practice of making dealers buy and register cars before selling them as “zero-mileage used cars”. It is a quick way for carmakers to meet aggressive sales targets.
Industry sources said that while pre-registration is not new, BYD has used it to cement its leading position in Singapore.
All of BYD’s Singapore dealers have had to pre-register cars. The newest BYD dealer, Jack Cars, had to pre-register 200 cars before being appointed in April.
The practice puts a large financial strain on dealers, which must pay for and register a large amount of stock without customer orders on hand.
The risk is heightened by China’s EV price war, in which new versions of existing cars enter the market at lower prices.
In recent months, BYD has slashed prices of new models in markets such as Australia and Thailand, causing older models’ resale value to fall by as much as US$9,000.
Dealers have since then been stuck with older cars on which they cannot make a profit.
Indeed, industry observers had pinpointed excess BYD inventory at dealerships as one reason for the slow sales that necessitated price war cuts.
In the wake of the dealer closures, the practice of pre-registration has now come under increased scrutiny; BYD and other China carmakers are to be questioned by the country’s commerce ministry.
If BYD does take over distributorship – and the accompanying margins – from distributor-dealers in South-east Asia, this will erode the latter’s revenue.
Granted, with the region’s EV sales still going strong, this is not a problem – at least until the market matures.
As competition from other China brands heats up, BYD’s regional dealers could find that there are risks even with a leading brand.
BYD said it is providing support to the two failed China dealership groups, without giving specifics. But it would have been better not to reach that point at all.
In bringing “China-speed” to regional car markets, BYD needs to balance its hunger for the top spot with taking care of its retail partners.
