Tesla Closes Its First Showroom In China In Retail Strategy Shift

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Electric vehicle giant Tesla (NASDAQ:TSLA) has closed what had been its flagship showroom in China, a move sources described as one aimed at paring retail costs in its second-largest market.

Tesla confirmed the closure of the showroom in Beijing’s upscale downtown shopping centre Parkview Green to Reuters on Wednesday. It said it had relocated the store to another mall called Raffles City. That showroom was opened in mid-October and is smaller than the original two-floor showroom in Parkview Green.

Two people with knowledge of the matter previously said Tesla had shut the Parkview Green showroom late last week. The store, opened in 2013, was Tesla’s first in China and was renovated and expanded in 2018.

 

A member of the mall’s staff confirmed to Reuters during a visit to the site on Wednesday that Tesla had shut the showroom, whose windows are now plastered with posters belonging to the next tenant, a streetwear brand BAPE.

“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 the Raffles City showroom.

Tesla owns and 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 put more emphasis on stores in less-costly suburban locations that can also provide repairs as the company works 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. It also sells its cars online. That has allowed it more leeway to adjust a retail strategy that had been initially modeled on Apple (NASDAQ:AAPL)’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% 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% from a year earlier, according the China Passenger Car Association. By comparison, overall sales of electric vehicles and hybrids increased 113.2%.