BYD aims to sell 700,000 vehicles in 2010
China's BYD Co Ltd, a battery and vehicle maker backed by U.S. billionaire Warren Buffett, aims to boost its vehicle sales to 8-9 million units by 2025, a senior executive said on Monday.
BYD, which began as a maker of rechargeable batteries in Shenzhen in 1995, has expanded into mobile phones and automobiles with an aspiration to be a leading producer of environmentally friendly electric vehicles.
The company, which is around 10 percent owned by Warren Buffett's Berkshire Hathaway, sold 170,000 vehicles in 2008 and aims to sell 400,000 units this year and 700,000 in 2010, according to Henry Li, general manager of BYD Auto's export arm.
"We aim to become one of the biggest auto makers in the world by 2025," Li told Reuters in an interview at BYD's Shenzhen plant.
The company, which on Sunday announced it was buying a bus maker in Hunan, would double its vehicle production capacity every year for the next few years, he said.
"Exports will account for a minimal portion (of sales) of several thousand to 10,000 units this year," said Li.
"This is because of the financial crisis overseas; we are focused on domestic growth," he said, adding the company aims to export half of its vehicle production by 2025.
Analysts believe BYD could reach its 2010 target if demand for small cars remains strong in China's third and fourth-tier cities.
"On exports, it may not sell as many plug-in electric cars as it hope in mature markets, but potential remains huge in emerging markets in southeast Asia, Africa and south America," said Chen Qiaoning, an industry analyst with ABM TEDA Fund Management.
BYD shares rose more than 9 percent on Monday before ending up 6.8 percent in a broader Hong Kong market up 1.4 percent.
Viewing Buffett's investment in the company as a stamp of approval, investors have driven up the stock price by over 300 percent in 2009, outperforming the 40 percent rise of the benchmark Hang Seng Index.
Li said Buffett will be able to refer business opportunities to the company.
BYD Auto, which launched its first plug-in hybrid F3DM sedan in China in December of last year, has been preparing to sell its plug-in models in the United States and Europe, with a targeted start date of 2011.
But the company faces fierce competition in mature markets where General Motors, Renault, Toyota Motor Daimler AG and Ford Motor are racing to develop electric and hybrid vehicles.
With a population of 1.3 billion, a fifth of the world's total, China has taken over the United States as the world's No. 1 auto market.
As incomes in third-tier cities rise, China is at the start of another car-sale bonanza that could last a few years, JP Morgan said earlier this month.
The country's passenger car sales jumped 48 pct in June to 872,900, lifted by government stimulus measures, including a halving of the sales tax on small cars and subsidies for buyers in rural areas.
"Currently, the demand is still from domestic market and what we're doing for exports is to build the channels, so when next year the market starts recovering we can do more," Li said.
BYD said earlier this month it planned to issue up to 100 million A shares on the Shenzhen stock exchange to raise capital for development projects. It could raise HK$4.4 billion based on its HK stock value.
But BYD has no immediate plan to buy assets overseas.
"Our edge is still here in China; simply acquiring assets from outside is not our strategy right now," he said.
The company said late on Sunday evening that it will buy a bus and coach maker, Hunan Midea Coach, for 60 million yuan. It will invest and develop a production base with annual output of about 400,000 units of vehicles and components in the Hunan Environmental Industrial Park.