China’s EV discount wars harm BYD’s profit: Share down by 8%

BYD shares dropped by almost 8% on Monday, following the drop in the company’s quarterly profit. The steep decline came as a result of a fierce pricing war in the company’s home market. 

According to LSEG, BYD recorded a net profit of 6.36 billion yuan ($891 million) for the April-June quarter on Friday, which was almost 30% less than the same period last year.

Although the company recorded inflated sales in overseas markets, the company’s revenue year-over-year growth was restricted to 14% i.e. about 201 billion yuan.

China’s domestic market is suffering from outbreaks of dicosunt wars, due to which the profitability of BYD soared in the last quarter. 

BYD’s mid-year financial report has flagged the increasing competition in price, and frequently doing excessive marketing has adversely impacted the industry, CNBC reported. 

In the last two years, the retail prices of cars have seen a decline by 19% i.e. almost 165,000 yuan ($22,900). citing Autohome Research Institute, Nomura reported.

Earlier, in the first half of the year, BYD's net profit increased by about 14% to 15.5 billion yuan. The sales of new energy vehicles reached a record high, and the company's first-half revenue increased by around 23% to 371.3 billion yuan, the report added.