BYD’s profit sinks along with its sales figures

BYD Auto, Industry News | Ash | August 23, 2011 at 10:54 pm

Chinese battery and car maker BYDCo. said its first-half profit plunged 89%, hurt by intensified competition and the end of government subsidies for car buyers.

BYD said Monday that its net profit fell to 275.4 million yuan ($43.1 million) from 2.42 billion yuan a year earlier.

Revenue fell 11% to 22.54 billion yuan.

BYD, 10% of which is owned by a unit of Warren Buffett’s Berkshire Hathaway Inc., reports results under Chinese accounting standards.

The sharp decline in earnings came as no surprise. The company has been facing rising competition from domestic rivals and from Sino-foreign joint ventures that have rolled out brands in China, a low-end market that for years was dominated by small, closely held auto makers such as BYD.

BYD sold 220,131 cars in the first half, down 23% from a year earlier. In addition to facing heightened competition, the company has suffered since Beijing canceled stimulus measures for car buyers.

BYD Chairman Wang Chuanfu said in a written statement that he expects growth in Chinese car sales will remain slow in the second half. He cited weak consumer confidence amid rising inflation rates in China and lingering concerns about the European debt crisis and the financial health of the U.S.

The company recorded lower revenue for its handset division as BYD’s single largest customer delayed orders, he said.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.