China's BYD Sees Profits Plunge 89% in the First Half of 2011

With a billionaire like Warren Buffett backing you up and forming a partnership with none other than Daimler AG is supposedly a recipe for success. Yet Chinese automaker BYD reported a 89% drop in profits in the first half of the year compared to the same period in 2010.

BYD’s sales in the first six months of 2011 were down 23.4%, to 220,131 units. Deliveries of the core models of its range, such as the F0 city car, the F3 compact and the F6 mid-sized sedan plunged right after the governments incentives for new car buyers stopped at the end of last year.

Its alternative-energy cars like the F3DM and the e6 fared even worse: the e6 electric crossover sold, according to JD Power, just six cars in the first half of 2011 –an average of one car per month…

However, the company blames not only the drop in sales, but also the increasing manufacturing costs and the competition which is getting tougher every day.

The only positive aspect in the dark clouds gathering over BYD is that its newer models, like the G3 and L3 compact sedans and the S6 crossover have posted strong sales according to the company, without, however, releasing any details.

BYD also pins a lot of its hopes on the more upmarket G6 compact sedan that will be launched later this year and will be the brand’s first car with a direct injection turbo engine and a dual-clutch gearbox.

Story sources: Automotive News