12th August, 2011
Not every sales stories from China is a rosy one. Private Chinese automaker, BYD, which is partly owned by Warren Buffett’s Berkshire Hathaway, is seeing sales slump.
After it almost doubled in 2009, BYD’s sales rose by just 17% in 2010, way behind the 32% industry average. For the first half of 2011, sales have dropped 20% year-on-year to 242,419 units, according to JD Power.
In the midst of this, sales Vice President, Xia Zhibing, has resigned. Xia’s departure is officially listed as for “personal reasons†in the company statement, but industry observers and analysts believe the real cause behind his resignation is the company’s sharp sales decline this year. Xia, 37, has been the sales chief since 2005.
Analysts point out that the government’s scrapping of tax incentives for small cars has resulted in a drop in demand for models from mass-market brands this year. However, BYD’s sales are falling faster than the industry at large. Also blamed is BYD’s aggressive dealership network expansion over the past two years. It backfired in 2010 when more than 20% of its dealerships closed, according to local media.
Or could it be BYD’s model line-up itself? The company has plenty of models that are “inspired†by other marques – Estima, Honda City, Merc SL, Megane CC, Altis, Optra 5, you name it. Could it be that the average Chinese is no longer digging “imitation†products when it comes to cars?