BMW's First Global 5S Store Closes Down

Recently, BMW's first global 5S store, Beijing Xingdebao Automobile Sales and Service Co., Ltd., posted a notice at the entrance announcing its closure.

Many car owners have not received refunds for their prepaid maintenance deposits, and several consumers have stated that they have paid tens of thousands of yuan in deposits, but delivery of their cars has become a "distant dream," prompting them to seek legal aid groups.

'I ordered a BMW i3 from Xingdebao in June this year, and the contract stated that delivery would be possible by the end of August. However, the car was delayed, so I requested a refund of my deposit. The store responded that the refund would be processed within a week. However, I ended up waiting in vain.'

An employee at a BMW store stated that "wages have been in arrears for several months."

BMW's authorization for this store terminated on October 20, 2024, and the company has suspended new car and after-sales related businesses. To facilitate the smooth and rapid implementation of capital injection or custody plans, the company has summarized relevant data and customer rights and interests in accordance with corresponding process requirements.

BMW was the first automotive brand to introduce the 5S concept in the industry. BMW Xingdebao was BMW Group's first global 5S store, opening in Beijing on June 18, 2012. The additional 'S' in 5S stands for 'Sustainability.'

Reasons for the Closure of Beijing Xingdebao

The closure of Beijing Xingdebao is related to financial pressures faced by its parent company, Singapore's G.A. Group. Due to issues such as rapid expansion, the impact of the pandemic, consumer spending downgrade, tight capital chains, and bank loan withdrawals, the company fell into a development dilemma, making it impossible for Beijing Xingdebao to maintain normal operations. BMW Group terminated G.A. Group's sales authorization in September 2024, and Beijing Xingdebao may have been included in this termination.

The decline in BMW's business in China is also a factor contributing to dealers facing closure difficulties. Sales in the Chinese market have led the global decline, prompting dealers to reduce prices to increase sales, further compressing profit margins. The fierce price war among major Chinese automotive brands has led to declines in G.A. Group's revenue, gross profit, and gross profit margin, resulting in a net loss.

According to data from the China Automobile Dealers Association, 50.8% of China's auto dealers suffered losses in the first half of this year, and about one-third of dealers failed to achieve 70% of their half-year sales targets, reflecting the difficulties faced by the entire dealer industry.

BMW is also facing the dilemma of insufficient capacity utilization. In the Chinese market, insufficient capacity utilization and reduced factory orders have led to difficulties in normal operations.

These factors, combined, have prompted BMW to re-examine its dealer network and management strategy in the Chinese market, leading to the closure of Beijing Xingdebao.

Continuous Explosions for BMW

This is not the first time BMW has faced such issues recently.

In July, BMW Zhongbao in Xiamen was exposed for delivery delays; in September, BMW recalled approximately 1.5 million vehicles due to potential faults in the braking system, affecting models such as the BMW X1, Mini Cooper, and Rolls-Royce Spectre, produced between June 2022 and August 2023; in September, a new case was filed against BMW Zhongbao in Xiamen, freezing funds of 4.68 million yuan; also in September, the Bank of China sued BMW over financial loans.

Of course, BMW is not the only one Deeply immersed in a negative vortex. The days of 'BBA' are currently difficult. The closure of Beijing Xingdebao is not an isolated incident but a microcosm of the decline in luxury brand business amidst fierce competition in the Chinese automotive market. The gradual diminishing fascination with imported luxury cars reflects the strong rise of domestic automotive brands, a positive omen for the progress of the domestic automotive industry.