2010-08-04 15:28

BYD Co, the Chinese automaker backed by Warren Buffett, cut its annual sales target for 2010 by 25 percent as growth slows in the world's biggest auto market.

The company now expects to sell 600,000 vehicles this year compared with an earlier goal of 800,000, Wang Jianjun, a spokesman for BYD's sales unit, said in an interview today. BYD's sales increased 162 percent to 448,397 units last year as China's industrywide auto demand jumped 46 percent.

Even as Chinese automakers have been counting on rising sales and profit in the nation to fund overseas expansion, monthly deliveries may begin declining from year-earlier levels as early as September, according to the Daiwa Institute of Research. Sales at Changan Ford Sales Co, a Ford Motor Co sales unit, fell 6.3 percent in July from a year earlier, according to a statement from the company yesterday.

"Sales at BYD in the first half weren't as good as expected," said George Yin, a Beijing-based analyst at Bocom International Holdings Co. "They sold 290,000 units of their main model, the F3, last year, but rivals have seen its success and developed similar models to take back market share."

Shares in BYD have declined 19 percent in Hong Kong trading this year. The stock was 2.6 percent lower at HK$55.15 as of 11:50 a.m. local time.

BYD, 10 percent-owned by Buffett's Omaha, Nebraska-based Berkshire Hathaway Inc, met 36 percent of its original sales goal in the first six months of the year. Deliveries to dealers rose 3.3 percent to 35,400 vehicles in June from a year earlier, lagging behind a 23 percent industrywide rise, according to the China Association of Automobile Manufacturers.

Western Europe, US

The automaker will start selling electric and hybrid cars in western Europe next year and become the first Chinese company to market alternative energy-powered vehicles in the region. The E6 electric car is among the models BYD plans to introduce, the company has said.

BYD, which signed an agreement in May with Stuttgart, Germany-based Daimler AG, to develop electric vehicles in China, also plans to hire 150 workers at a US headquarters in Los Angeles and plans to first sell its vehicles in California before expanding nationwide, according to an April statement.

While BYD is regarded as a leading Chinese developer of electric and hybrid vehicles, sales of those models are small, with high costs and low profitability, said Bocom International's Yin.

BYD delivered 48 of its F3DM plug-in hybrids in 2009 at 149,800 yuan ($22,116) apiece, or more than double the price of its best-selling F3 car.

Last month BYD said it may delay an A-share listing in China to seek "better timing" for the sale after stock markets fell.

BYD's board of directors requested a 12-month extension until Sept 7, 2011, to prepare a listing, the Shenzhen-based company said in a statement to Hong Kong's stock exchange today. Shareholders will vote on the proposal at an Aug. 30 meeting.