DgcityChinese automaker BYD has posted its first quarterly profit increase in more than a year, evidence that its aggressive overseas expansion is starting to offset the damage from a brutal price war and shrinking demand in its home market.
The world’s largest maker of electric vehicles said net profit attributable to shareholders rose 28 percent from a year earlier to just over 10 billion yuan in the third quarter. Operating revenue climbed 13.6 percent to 221.5 billion yuan. The return to profit growth followed four consecutive quarters of declines, a stretch in which BYD and its rivals cut prices repeatedly to defend share in an overcrowded Chinese market.
The growth engine is increasingly foreign. BYD has moved faster than any other Chinese carmaker to build sales abroad, shipping vehicles to Southeast Asia, Latin America, Europe and the Middle East and opening local assembly plants in key markets. Overseas shipments jumped in the first half of the year and now account for a large and fast-growing share of its revenue, with overseas margins richer than those at home.
The company’s quarterly filing underlined that shift. Inventories rose 60 percent from the end of last year, a build-up it attributed to growth in the overseas auto business, while customer prepayments surged 80 percent as dealers abroad stocked new models. Cash generated from operations climbed by a third.
The nine-month figures are less flattering. Net profit for the first three quarters slipped 4 percent from a year earlier and revenue was essentially flat, reflecting how difficult the first half was before the recent recovery. BYD’s spending on research and development fell over the nine months compared with last year’s unusually heavy investment, and the company recorded foreign-exchange losses as currency markets swung.
The Chinese market remains the central problem. Overall vehicle sales at home have declined for more than a year, consumers are cautious, and a long list of competitors, from state-owned legacy brands to EV specialists and technology giants, is fighting for fewer buyers. Sales of petrol cars are collapsing faster than electric sales are growing, leaving the overall market smaller.
BYD is using its scale to widen the gap with smaller rivals while pushing into pricier models and export markets where brand premiums are possible. It has also expanded its energy storage business, another beneficiary of the global electrification boom.
Investors will be watching whether the export-driven recovery can hold. Chinese car shipments abroad face rising tariffs and political resistance in Europe and elsewhere, and a tax rebate change at home next year will trim incentives for exporters. For now, though, BYD’s results show that being the biggest producer in the world’s biggest car market still offers a route through the industry’s shake-out.
