Wed, Jan 12, 2011 - Page 11 News List

Chinese auto sales on the road to recovering: BYD

TAMED TARGET:The BYD chairman said that his firm’s sales goals had not been practical, so it has revised its forecast and cut its dealer network to match demand

Bloomberg

BYD Co (比亞迪), the Chinese automaker backed by Warren Buffett, expects sales in the world’s largest car market to recover from this month after the company missed targets last year.

BYD may benefit as consumers traditionally buy more vehicles ahead of the Lunar New Year holiday, which begins on Feb. 3, BYD chairman Wang Chuanfu (王傳福) said at the North American International Auto Show in Detroit, Michigan.

Inventory levels at the -Shenzhen-based automaker are also now at “normal” levels after the company cut 100 dealers throughout China last year, he said.

The firm, maker of China’s best-selling F3 passenger car in 2009, faces competition from overseas rivals, including General Motors Co, Volkswagen AG and Honda Motor Co. BYD is under pressure as foreign makers introduce new, lower priced brands in the Chinese market, while Beijing ended tax incentives this month that have helped boost sales during the past two years.

BYD missed its sales target last year by 13 percent, selling 519,806 cars. The automaker fell short of the goal even after it cut the target by 25 percent in August from an earlier estimate of 800,000 units.

“Our original sales target was not quite practical and the market wasn’t as strong as expected,” Wang said yesterday in an interview.

BYD reduced dealers in China to match demand, he said.

BYD shares fell 1.43 percent to HK$41.25 by the close of Hong Kong trading. The stock dropped 40 percent last year, after surging more than fivefold a year earlier.

Vehicle sales at the automaker, 10 percent owned by Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc, fell 15 percent to 51,300 vehicles last month, even as domestic rivals, such as SAIC Motor Corp (上海汽車) and Dongfeng Motor Group Co (東風汽車), gained.

MidAmerican Energy Holdings Co, a unit of Berkshire Hathaway, bought 9.9 percent of BYD in September 2008.

BYD will bring its E6 pure electric cars to the US this year, Wang said on Monday, delaying a previous plan to begin deliveries last year. Fleet sales of the E6 will start at the end of this year, while retail deliveries will commence in the first quarter of 2012, he said.

BYD has been adding new models to its range of offerings as sales of its F3 sedan slows.

Sales of the F3, which is priced from 59,800 yuan (US$9,027), declined 6 percent in the 11 months to November last year compared with year-earlier period, according to JD Power.

Measures including consumption-tax cuts, subsidies for rural car buyers and incentives to trade in older models helped China’s industry-wide vehicle sales jump 32 percent to 18.06 million last year, helping China maintain its position as the world’s largest auto market for the second year.

China will raise the tax on vehicles with engines 1.6 liters or smaller to 10 percent from 7.5 percent from this month, the Chinese Ministry of Finance said on its Web site on Dec. 28. The tax was cut to 5 percent in 2009.

New local government measures restricting car ownership in Beijing and the expiration of sales tax subsidies “pose a challenge” to China auto demand this year, Wang said.

Beijing introduced policies on Dec. 23 to curb traffic congestion in the city.

Wang declined to provide a forecast for car sales this year, citing analyst predictions of a 10 percent overall industry wide growth.

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