Tesla closes flagship China showroom in retail strategy shift: sources

ELECTRIC vehicle giant Tesla closed its former flagship showroom in China late last week, as the company adjusts its sales and service strategy in its second-largest market, two anonymous sources said.

The showroom was in Beijing's Parkview Green, an upscale downtown shopping centre. Its closure was confirmed by a member of the mall's staff during a visit to the site by Reuters on Wednesday (Nov 2).

"Their contract with us expired and Tesla decided not to extend it," the mall staff member said.

A call to the store earlier in the day was redirected to another Tesla showroom nearby. Tesla did not immediately reply to a request for comment.

The Beijing store, opened in 2013, was Tesla's first in China. The company runs over 200 outlets across the country that display models and arrange test drives for potential buyers.

Reuters reported in September that Tesla was considering closing some showrooms in flashy malls in cities like Beijing, after traffic plunged during Covid restrictions.

It also plans to focus on stores in less-costly suburban locations that can also provide repairs, to meet chief executive Elon Musk's goal of improving service for customers.

As part of that effort, Tesla has been hiring technicians and other staff for service jobs in China. The company's China recruitment website showed 305 openings for service jobs as of Wednesday, little changed from September.

More than half of Tesla's China stores do not offer repair or maintenance services, and are in high-rent locations where space is limited. That included the now-closed Parkview Green Tesla store.

Tesla owns all of its own stores rather than relying on dealers, and also sells its cars online. That has allowed it more leeway to adjust a retail strategy that had been initially modelled on Apple's glossy stores in high-rent locations.

Tesla has cut starter prices for its Model 3 and Model Y cars by as much as 9 per cent in China, reversing a trend of price increases across the industry amid signs of softening demand in the world's largest auto market.

Tesla sold 318,151 vehicles in China in the first nine months of 2022, up 55 per cent from a year earlier, said the China Passenger Car Association. By comparison, overall sales of electric vehicles and hybrids increased 113.2 per cent. REUTERS

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