BYD lowers sales goal for 2010
At the end of 2009 when BYD blew away its 400,000 production goal with relative ease, it was expecting to do the same in 2010 and lowered its sales goal to an impressive 800,000 vehicles. However, the middle months of 2010 have turned out to be slow months indeed for the Chinese car industry and even the ever optimistic BYD have been forced to lower sales goal from 800,000 units to 600,000 for 2010.
The original sales goal of 800,000 was an impressive goal, but BYD have been forced into a dramatic climb down this week after middle of the year sales results looked like BYD was a long way off reaching 800,000 cars.
From January to June BYD sold 233305 vehicles, an increase of 41.54% over the previous time frame in 2009. The F3 was responsible for 107,935 sales (an increase of 3.14%), the F0 sold 59,988 vehicles (an increase of 101.13%), the F6 sold 28,273 (an increase of 50.20%), F3-R sold 25,050 (an increase of 117.84%) the G3 sold 12,027, and the BYD F3DM sold 18 vehicles (a fall in sales by -5.26%) and the Flyer sold 4 vehicles (a fall in sales by 55.56%)
In July BYD sold 32869 vehicles, which when added to BYD’s Jan to June sales figures stand at just 30% of the intended 800,000 sales goal, but as BYD are planning to lower their sales goal to 600,000 vehicles then BYD are already 44% of the way there.
BYD appears to be in a period of phenomenal unchecked growth, and with the Chinese media reporting that BYD are planning to expand their dealership network to a 1000 dealers they are in for a lot of internal competition between BYD dealership, if BYD are able to control their growth, then there is no doubt that they will be able to succeed in China.
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The most important task for BYD is to keep the quality of their products. Once the cutomers start complaining the performance, BYD’s auto empire will collapse soon. Remember junk is junk no matter how good you are at selling.
A recent report from a F3DM owner in Shenzhen reveals it’s poor performance. Extremely noisy engine, limited range on fully-charged battery (60km in EV mode), frequent visits (8 times in 10 days) back to dealership after delivery to fix the engine warning signal issue without success. EV is the calling card of BYD, this poor result is alarming!!! Will you pay RMB180,000 for a F3DM while F3 is selling for RMB50,000?
Here is my prediction to BYD’s sales pitch.
1)F0 will be priced below RMB30,000 to get QQ3 market share.
2)F3 will be priced below RMB50,000 to get the first time buyers market in 2 to 3 tier cities. G3 & L3 will replace F3 in 1 tier cities. Yet BYD’s wishful thinking for G3 & L3 never materialise.
3)F6 will follow F3 trend selling below RMB70,000. G6 & I6 will do the same trick but without success.
4)M6,S6 & S8 are there to show BYD’s ability to move upmarket. They will contribute little in sales number.
5)F3DM & E6 are just propaganda with no sales significance.
Whether BYD can meet the revised sales goal, I have little confidence.
An update on the EV competition in China.
1)Chery-Quantum JV partner with Better Place and A123 System to develop an EV version of Riich G5.
2)Hybrid Kinetic Motors (established by ex-CEO of Brilliance) partner with Jianghuai Auto to start a JV making EV developed by Italdesign.
3)Geely backed with Volvo EV technology and Taiwanese lithium ion battery supplier to develop various EV.
The list keep growing rapidly, BYD will face strong competition.
China’s auto industry needs strong competition amongst the domestic players
Having to cut a sales target can be a good thing in the long run. It reminds us that sales can not grow at this speed forever. If a company wants to succeed in the long run they have to make great cars.
I look forward to the day when the Chinese Auto industry contracts and consolidates. Even if my stock holdings will dive for a while.
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ALSO DON’T FORGET THE OVERSEAS MARKETS IN AFRICA.