Byd, China’s biggest-selling car brand, has reported a surge in second-quarter profit despite a raging price war in the country. The company’s net income more than doubled to 6.8 billion yuan (€863m) after selling a record number of plug-in hybrid and fully electric vehicles during the three months ended in June. Despite fierce competition leading to the slowest revenue growth in over a year, Byd still generated 140 billion yuan (€17.8bn) in quarterly sales. The company’s Hong Kong-listed shares climbed as much as 6.5%.
Byd’s strong financial performance will be crucial as it navigates another period of discounting in the world’s biggest car market. The company’s preferred strategy is cutting prices on newly released models. Over the weekend, Byd unveiled a slightly cheaper range of 2023 Tang vehicles. The company’s robust sales have helped it maintain its lead over Volkswagen as China’s best-selling car brand this year, after leapfrogging the German auto giant in the first quarter.
During the second quarter, Byd sold 700,000 clean cars, surpassing the previous high of 683,400 in the final three months of 2022. The company recorded 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 electric car sales have reached 1.5 million so far in 2023, through July.
Analysts at Bloomberg Intelligence believe that Byd’s vehicle shipments are on track to meet management’s target of 3 million units this year, and may even surpass expectations for 3.5 million units next year. This is due to strong domestic demand and rising exports. The company’s better economies of scale and deep vertical integration have helped offset pricing pressure, contributing to margin stability.
Byd’s performance has been exceptional considering the sector-wide price war, China’s weakening economy, and changes in electric vehicle subsidies, according to Citigroup’s Jeff Chung. The carmaker, known for selling affordable cars, has made progress in broadening its appeal. It has unveiled two luxury electric brands, Yangwang and Fang Cheng Bao, and has also introduced two cheaper models, the Seagull and Dolphin, to undercut its competitors.