> Warren Buffett Blog: China car maker BYD backed by Warren Buffett shares drop

Monday, August 25, 2014

China car maker BYD backed by Warren Buffett shares drop

Chinese car maker BYD Co Ltd , backed by Warren Buffett, saw its shares drop as much as 9 percent in Hong Kong before bouncing back after the company posted worse-than-expected first-half results and warned profit may fall by as much as a fifth in the first nine months of the year.

BYD said that its net profit during the first six months fell 15.5 percent to 360.7 million yuan ($59 million) from 426.9 million yuan a year earlier, dragged down by a 27 percent slump in vehicle sales volume.

The car maker currently has around a 37 percent share of China's new energy vehicle market, and said it expects to further strengthen its position in the second half of the year with new models and expanded production capacity. 

BYD and other Chinese carmakers such as Geely Automobile Holdings Ltd and Chery Automobile Co Ltd are losing market share to foreign rivals Volkswagen AG , General Motors Co and Ford Motor Corp as competition grows in the lower-end of China's auto market.

One bright spot in BYD's first-half results was the explosive growth in its business selling vehicles powered by new forms of new energy, principally electric cars. That division saw revenue surge more than 10-fold to 2.7 billion yuan on the back of government incentive policies.