BYD chairman Wang Chuanfu expects sales growth to slow in 2024, banks on export surge to shore up profitability

BYD chairman Wang Chuanfu expects sales growth to slow in 2024, banks on export surge to shore up profitability

BYD chairman Wang Chuanfu expects sales growth to slow in 2024, banks on export surge to shore up profitability

BYD, the world’s largest electric-vehicle (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 in mainland China.

Wang Chuanfu, the Shenzhen-based carmaker’s chairman and president, told an investors’ conference on Wednesday that deliveries in 2024 could top 3.6 million units, 20 per cent more than last year’s 3.02 million units, according to the meeting’s minutes seen by the Post. The projected year-on-year increase would represent just a third of the 62.3 per cent jump recorded last year.

Wang also forecast that exports will more than double to 500,000 units this year, as BYD steps up its go-global campaign.

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 same period in 2023. It has since February 18 slashed the prices of nearly all of its cars by 5 to 20 per cent, as sales in the world’s largest EV market show signs of slowing.

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Many of BYD’s rivals, ­including Xpeng, Zeekr and SAIC-GM-Wuling, General Motors’ three-way 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, last month said that 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 reductions could affect the per-vehicle margin, the gap between the selling price and tangible costs such as raw materials, labour and logistics. But he added that rising sales volume could help BYD sustain its profit growth.

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Last year, most of BYD’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 will also effectively bolster company profitability because its cars are 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 research note on Wednesday.

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Strong orders for some of BYD’s budget models will also quicken a transition from petrol cars to battery-powered vehicles in China’s automotive sector, the bank said.

BYD posted a record net profit of 30.04 billion yuan (US$4.16 billion) for 2023, up 81 per cent from a year earlier.

The carmaker, which is backed by Warren Buffett’s Berkshire Hathaway, dominates the mass category of the Chinese EV market, where EVs are sold at prices between 80,000 yuan and 200,000 yuan.

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