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The intensifying price war in Chinese auto market has taken its toll on auto makers' business, which has shown up in their earning report obviously. Chinese electric vehicle maker, Hong Kong-listed shares of BYD slid nearly 8% after the reported sharp drop in quarterly profit amid an aggressive price war across its domestic industry.
BYD, as the rival of Tesla reported net profit of 6.36 billion yuan ($891 million) for Q2, down about 30% from a year earlier. Par for the course, BYD’s profitability has been dented by the breakout of price war in China— something that has become a common occurrence in the space.
The company said in its mid-year earnings filing that increased price competition and frequent occurrences of excessive marketing in China’s EV market had exerted an adverse impact on the development of the industry. Related data shows that Retail car prices in China have fallen by around 19% over the past two years to around 165,000 yuan ($22,900).
BYD’s net profit for the first half of the year reached 15.5 billion yuan, up nearly 14%. The company’s first-half revenue climbed about 23% to 371.3 billion yuan, boosted by the EV sales which is hitting a record high.
In recent years, BYD and other Chinese automakers have been aggressively expanding global markets, attempting to grab global market share amid intensifying domestic competition. BYD has opened showrooms across Europe and launching its cars at competitive prices over the last two years. In July, BYD recorded over 13,000 new registrations in Europe, up 225% annually, according to the European Automobile Manufacturers Association.Complete digital access to quality Glebors financial topic with expert analysis from industry leaders.
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