BYD's cut sparks price war concerns
By Alison Leung |
February 19, 2011, Saturday
|
Print Edition
Print Edition
WARREN Buffett-backed Chinese car maker BYD Co has slashed prices of five models by up to one-fifth, fueling concerns it would spark a price war in the lower segment of the world's largest auto market.
BYD said the price cut was to gain market share, but analysts said it was in response to its weak sales in the past few months. BYD posted a 15 percent fall in January sales.
BYD, which sells some of the country's cheapest cars, cut prices on its five best-selling models - the F0, F3, F3R, G3 and F6 - by between 3,000 yuan (US$455.8) and 15,000 yuan each.
The biggest cuts, of 10.3 percent to 19.3 percent, were for its G3 model, BYD said, adding that it hoped the first cuts in several years would lift G3 and F6 sales to more than 10,000 each per month.
Analysts said other auto makers in China may follow suit by cutting prices of low-end cars.
"For the mid- to high-end products, I haven't seen any price wars but for the smaller segment, it most likely will face price competition," said Jack Yeung, an analyst at BNP Paribas.
But a Geely spokesman said the firm, which makes subcompacts and small hatchbacks, had no plan to cut prices.
BYD's price cut "may at least help volume, which may help market share and may help brand recognition, and probably may help build the network, but it is going to be very bad for investors," said Scott Laprise, an analyst of CLSA.
BYD said the price cut was to gain market share, but analysts said it was in response to its weak sales in the past few months. BYD posted a 15 percent fall in January sales.
BYD, which sells some of the country's cheapest cars, cut prices on its five best-selling models - the F0, F3, F3R, G3 and F6 - by between 3,000 yuan (US$455.8) and 15,000 yuan each.
The biggest cuts, of 10.3 percent to 19.3 percent, were for its G3 model, BYD said, adding that it hoped the first cuts in several years would lift G3 and F6 sales to more than 10,000 each per month.
Analysts said other auto makers in China may follow suit by cutting prices of low-end cars.
"For the mid- to high-end products, I haven't seen any price wars but for the smaller segment, it most likely will face price competition," said Jack Yeung, an analyst at BNP Paribas.
But a Geely spokesman said the firm, which makes subcompacts and small hatchbacks, had no plan to cut prices.
BYD's price cut "may at least help volume, which may help market share and may help brand recognition, and probably may help build the network, but it is going to be very bad for investors," said Scott Laprise, an analyst of CLSA.
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