BYD's profit plunges 30% as price war takes toll on market leader

Despite robust overseas sales, big discounts see carmaker's income miss estimates

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BEIJING - The fallout is becoming impossible to ignore in the fierce battle among Chinese carmakers.

With BYD reporting a staggering 30 per cent plunge in quarterly profit on Aug 29, its first decline in over three years, it has become clear that not even dominant players are safe in the cutthroat battle for market share.

Its shares dropped as much as 8 per cent in Hong Kong on the morning of Sept 1.

Despite robust overseas sales, BYD's net income of 6.36 billion yuan (S$1.14 billion) for the three months ended June 30 fell short of analysts' estimates for a modest increase.

Heavy discounting saw BYD's gross margin contract to 18 per cent from 18.8 per cent in the first half of 2024, although that figure is still among the top in the industry, exceeding rivals such as Zhejiang Geely Holding Group and Chery Automobile.

BYD blamed "industry malpractices" and "excessive marketing" for pressuring its bottom line - an ironic twist considering BYD has been a major driver of the price war, leading multiple rounds of cuts since 2023, including its latest in May.

Its most recent discounting campaign prompted the Chinese government to warn automakers off "rat race competition", saying that price wars can affect supply chain security and seriously damage the international reputation of "Made-in-China".