BYD sees 95% fall in profits

Chinese automaker BYD (1211.HK) said profits for the first half of the year may drop as much as 95%, due in part to the end of China’s auto tax breaks, Bloomberg reported. In a preliminary forecast filed to the Hong Kong Stock Exchange, the firm, part-owned by Warren Buffett’s Berkshire Hathaway (BRK.NYSE), said that its net income for the year to June 30 may be just US$19 million, down from US$374 million last year. BYD said in a statement that the decline was due to the “cancellation of preferential tax policy on passenger vehicles with emission below 1.6 liters and intensifying market competition.” General Motors (GM.NYSE, GMM.TSX) and Nissan (7201.TYO) have both introduced new models to the China market, eroding BYD’s domestic advantage. The firm’s share price has fallen 44% this year, compared with an overall 6% drop in the benchmark Hang Seng Index.