The Jinan Times, which is owned by the government of the provincial capital of Jinan, reported yesterday that Qiancheng Holdings, which ran BYD stores, had fallen into difficulties, affecting more than 1,000 consumers who were still owed warranty coverage and after-sales services.

“The affected stores are spread across four cities, including Jinan and Weifang,” the newspaper said, citing visits it had made.

“Car owners were organising rights protection groups to seek solutions,” it added.

The newspaper said Qiancheng, which once had an annual turnover of ¥3 billion (US$416.71 million) and employed 1,200 people, published a letter on April 17 blaming adjustments BYD had made to its dealer policy for putting its cash flow under tremendous pressure.

Qiancheng did not immediately respond to a request for comment from Reuters today.

Asked for comment, BYD referred Reuters to yesterday’s article by Chinese media outlet Cover News that cited an unnamed BYD public relations representative as saying that it was Qiancheng’s rapid expansion, rather than its policy adjustments, that had led to its crisis.

The representative added that BYD was providing support to Qiancheng.

Qiancheng’s situation highlights the growing stress facing China’s auto market, the world’s largest, as intensifying competition puts pressure on suppliers, automakers and dealers.

Car dealerships have been particularly vulnerable to a shift in the industry towards direct selling and a slowdown in consumer spending.

BYD has a small number of its own stores in China, but mostly uses dealers in that market.