BYD’s Growth Slows as China’s Auto Price War Takes a Toll

BYD Co. reported its weakest revenue growth in more than a year in a potential sign of the damage discounting has done in China, the world’s biggest auto market.

(Bloomberg) — BYD Co. reported its weakest revenue growth in more than a year in a potential sign of the damage discounting has done in China, the world’s biggest auto market.

Revenue rose 67% to 140 billion yuan ($17.8 billion) in the three months ended June, the smallest gain since the first quarter of 2022, according to Bloomberg calculations based on first-half earnings published Monday. Net income more than doubled to 6.8 billion yuan after the company sold a record number of plug-in hybrid and fully electric vehicles.

Read More: Tesla Reignites EV Price War With New Round of Cuts in China

Shares in BYD rose 3% in Hong Kong as analysts remained positive on the company’s earnings momentum.

China’s auto market has been embroiled in a fierce price war this year. BYD’s still-robust financial performance will help as it navigates another period of market discounting with a preferred strategy of cutting prices on newly released models. On the weekend, BYD unveiled a slightly cheaper range of 2023 Tang vehicles at the Chengdu Auto Show.


The continued strong sales volume performance in recent months has enabled BYD to maintain its lead over Volkswagen AG as China’s best-selling car brand this year, having leapfrogged the German auto giant in the first quarter.

It sold 700,000 clean cars during the second quarter, beating the previous high of 683,400 in the final three months of 2022. It notched 156.3 billion yuan in revenue during the earlier period and benefitted from a record gross margin of 19%. BYD’s margin in the second quarter was 18.7%. Total passenger EV sales hit 1.5 million so far in 2023, through July.

What Bloomberg Intelligence Says

Vehicle shipments appear on track to meet management’s target of 3 million units this year, and possibly surpass consensus expectations for 3.5 million next year, powered by strong domestic demand and rising exports. Better economies of scale and a deep vertical integration help offset pricing pressure, contributing to margin stability.

— Joanna Chen and Steve Man, BI auto analysts

“Since BYD has offerings across almost all segments and price-points, BYD as a whole has been net-impervious to price cuts,” said Jack Shea, chief financial officer at Shenzhen-based hedge fund Snow Bull Capital Inc., which has invested in both BYD and Tesla.

Citigroup’s Jeff Chung described BYD’s performance in a post-earnings research note as “exceptional” in the face of the sector-wide price war, China’s weakening economy and EV subsidy changes.

Known for selling affordable cars to the masses, BYD has also been making progress in bolstering its appeal to a wider range of consumers.

Read More: BYD Jumps as New Model Launches Seen to Boost Premiumization

The carmaker unveiled two luxury brands, Yangwang and Fang Cheng Bao, enabling it to sell EVs in the 1 million yuan price category, more than double the cost of some of its earlier higher-end vehicles. It also pushed two cheaper models, called the Seagull and Dolphin, to undercut its peers. 

While BYD has a seemingly unassailable lead at the top of the market, weaker foreign rivals and smaller Chinese EV players are making moves to boost their capabilities, especially in the so-called smart EV, autonomous driving space. 

Xpeng Inc. snapped up Didi Global Inc.’s smart car business Monday in a $744 million deal. Xpeng’s appeal in the intelligent vehicle space also won it a $700 million investment in July from Volkswagen, which is seeking to turn around its fortunes in the rapidly changing China auto market.

–With assistance from Charlotte Yang.

(Adds chart, analyst reaction, more context from 5th paragraph)

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