BYD, SAIC defy China slowdown with rising quarterly profits
BYD Co. reported Thursday that it had more than doubled its quarterly net profit year on year as demand surged for electric cars and plug-in hybrid vehicles.
BYD's quarterly profit jumped 169 percent excluding special items. Including the sale of an electronics subsidiary, the profit jump was much sharper.
The Shenzhen-based automaker's enjoyed strong earnings despite a stagnant car market that has been weighed down by the slowest growth of China's economy in 25 years.
BYD's results and a 3.8 percent profit rise posted separately by SAIC Motor Co. are bolstering analysts who predict that China's car market is poised for a rebound.
"Third quarter probably marks the lowest, the bottom out," said Ka Leong Lo, a Hong Kong-based analyst with Maybank Kim Eng.
To be sure, BYD and SAIC's earnings reports follow weak financial results from Great Wall Motor Co. and BAIC Motor Corp. Moreover, brokerage China Securities has predicted that overall industry profits for the third quarter will fall 20 percent.
But China's light-vehicle sales snapped six consecutive months of declines to post a 3.3 increase in September, although year-to-date sales have increased by a meager 2.8 percent in a market accustomed to double-digit growth.
The government's decision to reduce the purchase tax on cars with engines of 1.6 liters or less is expected to boost sales.
SAIC stands to benefit from the tax cut as vehicles it makes through separate joint ventures with Volkswagen AG and General Motors account for four of the ten top-selling cars with engines under 1.6 liters, according to IHS Automotive.
The Shenzhen-based automaker's enjoyed strong earnings despite a stagnant car market that has been weighed down by the slowest growth of China's economy in 25 years.
BYD's results and a 3.8 percent profit rise posted separately by SAIC Motor Co. are bolstering analysts who predict that China's car market is poised for a rebound.
"Third quarter probably marks the lowest, the bottom out," said Ka Leong Lo, a Hong Kong-based analyst with Maybank Kim Eng.
To be sure, BYD and SAIC's earnings reports follow weak financial results from Great Wall Motor Co. and BAIC Motor Corp. Moreover, brokerage China Securities has predicted that overall industry profits for the third quarter will fall 20 percent.
But China's light-vehicle sales snapped six consecutive months of declines to post a 3.3 increase in September, although year-to-date sales have increased by a meager 2.8 percent in a market accustomed to double-digit growth.
The government's decision to reduce the purchase tax on cars with engines of 1.6 liters or less is expected to boost sales.
SAIC stands to benefit from the tax cut as vehicles it makes through separate joint ventures with Volkswagen AG and General Motors account for four of the ten top-selling cars with engines under 1.6 liters, according to IHS Automotive.
