BYD EYES 20% SALES INCREASE AS CHALLENGES LOOM IN CHINA
Carmaker banks on exports to boost profits amid overcapacity fears and price war in home market
BYD, the world’s largest electricvehicle (EV) maker, is targeting a 20 per cent increase in sales this year, just a third of last year’s tally, as overcapacity concerns and a price war loom over the sector on the mainland.
Wang Chuanfu, the Shenzhenbased carmaker’s chairman and president, told an investors’ conference on Wednesday deliveries in 2024 could top 3.6 million units, up from last year’s 3.02 million, according to the meeting’s minutes seen by the Post.
The projected increase would represent just a third of the 62.3 per cent jump recorded last year.
Wang also forecast exports would more than double to 500,000 units this year, as BYD stepped up its go-global push.
BYD did not respond to a request for comment.
“Overall demand for EVs [in China] is set to fall in 2024, as consumers refrain from buying items such as cars due to concerns about job prospects and incomes,” said Zhao Zhen, a sales director with Shanghai-based dealer Wan Zhuo Auto. “A 20 per cent increase will not be easy to achieve, given the current weak market sentiment.”
In the first two months of this year, BYD delivered 325,706 cars to customers, an increase of 2.9 per cent from the year before. It has slashed the prices of nearly all of its cars by 5 to 20 per cent since February 18, as sales in the world’s largest EV market show signs of slowing.
Many of BYD’s rivals, including Xpeng, Zeekr and SAIC-GMWuling, General Motors’ threeway venture in China, have followed its move and reduced the prices of their bestselling models in a cutthroat market.
Cui Dongshu, general secretary of the China Passenger Car Association, said last month most carmakers were likely to continue offering discounts to retain market share, which could reshape the domestic market.
During the meeting with investors, Wang said price cuts could erode the per-vehicle margin, the gap between the selling price and tangible costs such as raw materials, labour and logistics. But he added rising sales volume could help BYD sustain its profit growth.
Last year, most of the firm’s sales were on the mainland, with exports accounting for only 242,765 units, or 8 per cent of the total. But the exports tally represented a 334 per cent jump over 2022.
Wang said a surge in overseas shipments would effectively bolster BYD’s profitability because its cars were priced higher outside the mainland.
“We expect the overseas volume to reach 450,000 units in 2024, and for it to make a disproportionately higher contribution to the earnings mix, on higher margins and a more favourable pricing environment,” HSBC said in a note on Wednesday.
Strong orders for some of BYD’s budget models would also quicken a transition from petrol cars to battery-powered vehicles in China, the bank said.
BYD posted a record net profit of 30.04 billion yuan (HK$32.53 billion) for 2023, up by 81 per cent from a year earlier.
The carmaker, backed by Warren Buffett’s Berkshire Hathaway, dominates the mass category of the Chinese EV market, where such vehicles are sold at between 80,000 yuan and 200,000 yuan.