Xia's departure is for "personal reasons," the company said in a statement. But analysts widely believe the real cause of his resignation is the company's sharp sales declines this year.

After nearly doubling in 2009, BYD sales rose only 17 percent in 2010, trailing the industry's 32 percent increase.

In the first six months of 2011, company sales dropped 20 percent year-on-year to 242,419 units, according to J. D. Power.

The government's elimination of tax incentives for small cars has resulted in a drop in demand for models from mass-market brands this year. But once again, BYD's sales are falling faster than the industry.

In part, analysts blame BYD's aggressive expansion of its dealership network over the past two years. BYD's strategy backfired in 2010 when more than 20 percent of its dealerships closed, according to Chinese media.

Xia, 37, joined BYD after graduating from university in 1998. He was appointed the company's sales chief in 2005. His departure takes effect on August 5.