Chinese automaker BYD said profit may fall as much as 98 percent this year because of the bad economy.
The slowing economy affects demand for BYD cars, batteries and solar-energy cells, said the carmaker, which is owned by Warren Buffett’s Berkshire Hathaway investment fund. BYD estimates net income for the year ending December 31 may drop to between 27.7 million yuan ($4.4 million) and 110 million yuan, compared with a profit of 1.38 billion yuan in 2011.
BYD’s third-quarter profit dropped 94 percent as the economic downturn affected sales of solar-energy cells and major customers, including Nokia, ordered fewer lithium-ion batteries to power mobile devices. Shenzhen-based BYD also saw car sales fall as it relied on aging models and its Chinese brands lost market share because of increased competition, according to analysts at Bank of America quoted by Bloomberg.
“Sales in the Chinese car industry started to slow this year as the economy’s growth prospects dimmed, and the company faced a lot of competitive pressure in the market. Global demand for solar energy was also weak, leading to a big fall in our sales,” BYD said in a filing yesterday.
Third-quarter net income dropped to 4.6 million yuan, from 77.4 million yuan a year ago, BYD also said.