Cars

Nagged by slow sales, BYD slashes prices

By Han Tianyang (China Daily)
Updated: 2011-02-21 11:19

BYD models pile on the sales lot. [Photo / Asianewsphoto]

Only carmaker in the nation to report year-on-year fall in figures

BEIJING - Faced with continuing stagnant sales, domestic automaker BYD announced a major price cut on its five most popular models on Feb18 to boost demand.

The company said it expects "to be proactive and win more market share" by reducing prices on its F0, F3, F3R, G3 and F6 cars.

BYD lowered the price of its G3 model by up to 15,000 yuan ($2,230.48), a nearly 20 percent cut from the previous sticker price of 80,000 yuan. The minimum price of its F0 micro car is only 369,000 yuan after the price reduction.

Both the F3 and F0 now have monthly sales surpassing 10,000 cars, and the move could enable models like the G3 and F6 to break through the 10,000-unit threshold as well, the company said.

BYD sold about 52,000 cars last month, a 15 percent drop over the same period last year, while China's passenger vehicle market increased 18 percent to 1.15 million units. BYD was the only carmaker to report negative year-on-year growth in January.

Last year, the company reduced its sales goal to 600,000 units from an ambitious 800,000 target, but still failed to meet it, with only 520,000 cars moved by year's end.

Related readings:  BYD's discount may lead to price war in low-end market: analysts  BYD drops 100 dealers after sales disappoint  BYD eyes mainland listing this year  BYD says China sales to recover from this month

Due to government incentives on small cars, BYD experienced explosive sales growth at the beginning of 2010, but the second half turned sluggish as demand was drawn in advance, said Jenny Gu, a senior analyst at market research firm JD Power.

The trend continued in January, Gu said.

"For a young brand and low-end carmaker, price cuts are the only way to stimulate sales," said independent analyst Zhong Shi.

How much the aggressive play will help boost BYD sales in part depends on the reaction of its competitors, Zhong noted.

BYD may not necessarily gain more share if other domestic carmakers respond by also lowering prices, he said.

Domestic car brands might follow the move, but joint venture carmakers are not likely to do so, since most of them have been operating at full capacity, Gu said.

According to forecasts by JD Power, BYD sales are expected to increase 10 percent to 570,000 units this year.

The company hasn't announced a sales target for 2011, only saying it expects to grow as fast as the market average.

According to the company, it will launch three new models - the S6, G6 and G3R - in the first half this year to expand its product portfolio.