• Oct 27, 2010
Wang Chan Fu, BYD Chairman

Warren Buffet-backed BYD is in trouble. The Chinese automaker saw profits fall by an astounding 99 percent in the third quarter. The fall was the second largest among the 982 stocks that make up the MSCI Asia Pacific Index. The company saw sales fall by a hefty 25 percent through September, even though China's overall car market swelled by 19 percent among increased demand. BYD, meanwhile, saw sales fall off by 19 percent in August alone. News of the company's stumbling caused its stock to drop in value by around 10 percent – the largest fall since November of 2008.

According to Bloomberg, the news is only the most recent in a spat of BYD misfortunes, including having seven manufacturing facilities seized by the Chinese government amid accusations that the plants were built illegally. In addition, the company has had to postpone its plans to introduce its all-electric E6 in the United States. Originally, BYD wanted to begin selling the car on U.S. soil by the end of this year, but that goal has now been shifted to sometime in 2011.

Warren Buffet, who owns a 10-percent stake in the company, says he still believes that BYD will prove to be one of the world's leading manufacturers of electric vehicles in the near future.

[Source: Bloomberg | Image: Mike Clarke/AFP/Getty]


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  • 48 Comments
      • 4 Years Ago
      If they want to sell cars in the US they should have to partner with an American car company and hand whatever little enhancements they have made to our technology to us.
      • 4 Years Ago
      May be they stopped bribing Chinese officials.
        • 4 Years Ago
        Yeah, stupid Communism. What's next, force GM China's CEO to step down because of a loan grant?

        Oh, wait a minute....

        If you truly believe China is "communism" to its truest definition, then well, time to read up on Marx and Engel's Manifesto. China is about as capitalism as you can get - a country where the rich gets richer, poor gets poors, crappy distribution of wealth, but booming in economy and manufacturing.

        Britain 1800's anyone?
        • 4 Years Ago
        Dori, read closely what your quote says; that's the exact point I was trying to make.

        Between China and the US:

        In which country is the government trying to take control in private companies, by handing out money, and telling them who can be on the board, and how much to earn? Or helping out private banks due to their poor decisions?

        In which country is the market almost completely free and privatized, with the government having little control, and therefore a who bunch of garbage comes out of the factories?


        IMO China is not failed communism, that's USSR. China is communism turned to crappy Industrial Rev era Capitalism. 40 years ago China was communism, when all factories were owned by Mao...
        • 4 Years Ago
        China is definitely not an example of classical communism, but it's not exactly pure capitalism either. While business is technically private owned, there is HEAVY government investment in the industries that they've chosen to focus on, such as automotive and technology.

        That said, while the US has also invested money into certain private businesses due to economic challenges, calling it a takeover is an exaggeration.

        And, more to the point, I'm still surprised buffet is so heavily BYD. I have first hand experience with the Chinese auto industry. It will be a while before any of these home grown companies really break through. Under the surface, it's still a very corrupt, backwards country that isn't ready to do business with the west on even terms.
        • 4 Years Ago
        @RJ, I'm just an engineer, so I have to look up some Wikipedia article, but according to wikipedia, "Capitalism is an economic system in which the means of production are privately owned and operated for a private profit; decisions regarding supply, demand, price, distribution, and investments are made by private actors in the market rather than by central planning by the government; profit is distributed to owners who invest in businesses, and wages are paid to workers employed by businesses and companies."
        I can't agree with you saying "China is about as capitalism as you can get". I think China is just a failed example of communism, just like snp said.
      • 4 Years Ago
      That's a damn shame.

      First it was telling the average American Joe that he needed to pay more taxes and now finding out that buying into Red China doesn't guarantee happiness and prosperity for America's "smartest" investor.

      Oh how the mighty have fallen.....
        • 4 Years Ago
        As if it stops with the very wealthy.

        • 4 Years Ago
        Eloquently put, B&B. And well reasoned, too.

        I can see how your friends would be jealous of your Rhodes scholarship.
        • 4 Years Ago
        ....BYD is state-owned?
        • 4 Years Ago
        Obviously sarcasm isn't your forte.

        Americans clueless as to the long term? Who, exactly? Ford?

        BYD is a state-run electric car company based in China, correction, Red China. I will concede that "long term" has a different meaning to the Chinese than to Americans. It's far less messy in China.

        Regarding Buffett, in my humble opinion, as he has aged he has taken to doing what many extremely successful Americans are prone to - Lecturing the to rest of us. I find his CNBC sessions pompously boring, but concede his Berkshire Hathaway success.
        • 4 Years Ago
        Get a grip.

        While I don't expect people on a car blog to get it - not too surprisingly everyone has blown this out of proportion - but BYD might be hurting now, but they are far from down and out altogether. A 99% drop in profits still means they actually made some kind of profit as small as that might be.

        Buffet takes the long-road approach, something that most 'Mericans know nothing about. He wouldn't have invested in these guys if their long-term prospects weren't very good.
      • 4 Years Ago
      That could get somebody a bullet behind the ear.
      • 4 Years Ago
      Warren Buffett has managed a tad better than most everyone with his buy and hold strategy, so if he's buyin', I'm lookin'. Who knows, 20 years from now new shareholders will either look like a genius, or will be writing off their losses.
      • 4 Years Ago
      This is actually bad. The more manufacturers there are producing electric vehicles, the better. We need this technology so start advancing, with that prices will go down, improvements will be made in range and longevity, etc. And if nothing else, more competition is always better for the market...
        • 4 Years Ago
        We have enough crap here that's made in china. They should never be able to sell cars here, especially given their safety(or total lack thereof).
        • 4 Years Ago
        Can we get over the deathtrap prejudice already? Anything sold here will have to pass the same tests everything else does. It's still legal to ride a motorcycle. If safety is your priority, be an informed consumer and put your money where your mouth is, if you'd prefer something lighter and simpler (not speaking of the E6, just autos in general) at the expense of safety, that should be just as available an option.
        • 4 Years Ago
        Corner49:
        I've been to China and ridden in some of these cars. They're deathtraps.

        Although I do see some problems with some of the auto standards lately (the roof rollover standards are excessive for example), the idea that companies should be able to offer deathtraps too doesn't sit well with me.

        You cannot always tell how safe a car is by inspection. So if the regulations were relaxed, companies would compete to make their cars less safe while still appearing safe. They'll cut corners in the places you don't notice. And that's not good.
        • 4 Years Ago
        Adding cheap Chinese deathtraps to the market doesn't supply real competition, it just puts pressure on everyone else to cut corners, and kills people along the way...
      • 4 Years Ago
      They give away some cool stuff at the autoshows. Last year they had a couple of really great looking ladies standing around. To bad I can't speak chinese.
        • 4 Years Ago
        The Chinese government would beg to differ with you.

        They make it illegal to air children's programming in these "village languages" you speak of, so as to make Mandarin (simplified printed form) the sole national language. In essence, make it into the Chinese you say doesn't exist.

        So Shanghainese, a "village language" spoken by 14 million people, is being killed.

        Also, a lot of these "village languages" shared the same printed form as Mandarin and Cantonese, so that when talking about printed forms, there is much closer to a single "Chinese".
        • 4 Years Ago
        There's no such language as Chinese. There's Mandarin, Cantonese, and a bunch of funky village languages. I dated a Cambodian girl who spoke a far North Dialect of Mandarin/Cambodian, and it more or less sounded like she popped popcorn out of her mouth when she talked, mixed with swallowing thick gooey caramel. It just sounded strange.. but at the same time, it worked.
      • 4 Years Ago
      I think that BYD's profits are falling because BYD builds knockoffs. I'm an avid chinese car fan, but BYD's cars are clones of other established cars (See BYD F0, F3, H6......) and they are not of any good quality. Cars from Chery, Geely, FAW and even Brilliance surpass BYD on design, quality and even price.
      • 4 Years Ago
      wanderer9 10:03AM (10/27/2010)

      "If they want to sell cars in the US they should have to partner with an American car company and hand whatever little enhancements they have made to our technology to us."

      Exactly what I was thinking.
      • 4 Years Ago
      Warren Buffet's been latching on to a lot of stinkers lately. I think he's lost it.
      • 4 Years Ago
      so are they going to blame this on Japan again?
      • 4 Years Ago
      Build Your Deficit
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