China’s carmakers post losses in 2011

BYD Co., the Chinese carmaker which became famous overnight when American billionaire Warren Buffet bought into the company, posted a 13.7% drop in revenues in 2011, even as another major local player, Chery Automobile Co., also reported losses. Major Chinese automakers are experiencing low sales after enjoying a spell of fast growth, because foreign rivals are giving them a run for their money. BYD, which is in partnership with Daimler AG, sold 448,400 cars in 2011; the first time the company registered a year-on-year loss since it launched independently developed cars. The company’s net profit for 2011 is expected to decline. On the other hand, Chery saw its sales shrink by 2.8% on the year, with a sale of 607,000 units, the first time the company’s sales plunged since 2008, when it faced a financial crisis. In 2010, Chery overtook Honda and was the 6th biggest carmaker in terms of market share, a feat the company achieved by increasing its sales of low-priced cars. But the company soon lost momentum when competitively priced cars were launched by General Motors and Hyundai Motor Co. Chery is in negotiations with Fuji Heavy Industries over a joint venture. But Beijing has indicated that new joint auto making ventures will no longer be encouraged in view of the drastic slowdown in growth of car sales in 2011, a sharp contrast to the 30% jump in 2010. (January 11, 2012)