BYD on Tuesday posted a nearly 90% drop in third-quarter profit against a broader economic slump in China while its gasoline-powered car business showed signs of recovery.
Why it matters: Despite falling profit in the third quarter, BYD has remained one of the few Chinese automakers which expanded both revenue and profit in the past nine months, a tumultuous period for the country’s broader auto market after three decades of growth.
- The Warren Buffet-backed automaker recorded RMB 93.8 billion (around $13.3 billion) in revenue in the first three months of the year, rising 5% year on year. Net profit rose 3% year on year to RMB 1.6 billion during the same period.
- Chongqing-based Chang’an, one of China’s “big four” automakers, last week disclosed net losses of RMB 2.4 billion to 2.8 billion for the first three quarters of this year, a decline of at least 300% from the same period last year.
- Formerly state-owned FAW Group expects to book net losses of up to RMB 296 million for the first nine months of this year, compared with an RMB 135 million net profit in the same period a year ago.
- Sales of SAIC Motor were also down 14.2% year on year to 4.41 million units for the first three quarters of the year, according to the company.
Detail: Hong Kong and Shenzhen-listed BYD saidlate Tuesday that it earned revenue exceeding RMB 31.6 billion in the third quarter this year, declining 9.17% year on year. Net profits plunged 88% to RMB 120 million from RMB 1.05 billion seen the same period a year ago.
- Sales volume reached nearly 335,8000 units for the nine months ended Sept. 30, decreasing 4.5% year on year, with new energy vehicles (NEV) accounting for more than half of sales revenue.
- BYD’s NEV sales during the first two quarters shot up 94.5% year-on-year, but drastic reductions in government subsidies beginning end-June weighed heavily on the three-quarter figures, which slowed to 34.31% year on year.
- Overall auto market demand will remain weak in the last quarter on macroeconomic headwinds, the company warned.
- The sales of gas-powered vehicles, however, rebounded by a few thousands units to 27,048 units in September after three months of decline. The 44.9% year-on-year decline seen in during the first half slowed to 31.2% for the first three quarters of the year.
- Despite intensified competition, the country’s biggest EV maker expects its fuel vehicle business to further recover in the fourth quarter, driven by new models such as “Song Pro,” a five-seat SUV that starts at RMB 89,800 (around $12,725).
Context:Chinese consumer demand for EVs have fallen drastically on concern over safety issues amid a series of self-combusting incidentsand increasing promotional efforts from traditional automakers, said investment bank China International Capital Corp in a recent report.