BYD’s sales fall for seventh month, down 20.5% in March

BYD remained under pressure as vehicle sales fell for the seventh consecutive month, reflecting intensifying competition in China’s electric vehicle market.

Sales dropped 20.5% year-on-year to 300,222 units last month, according to Reuters calculations based on company disclosures and a Weibo post by executive Li Yunfei.

The decline was less severe than February’s 41.1% drop but still points to persistent weakness.

For the first quarter, vehicle sales decreased by 30% compared to the same period last year, highlighting continued pressure on volumes.

Domestic challenges weigh on performance

The slowdown comes as competition in China’s EV market intensifies.

BYD, once a dominant player with its Dynasty and Ocean series, has been losing ground to rivals such as Leapmotor and Geely, which have narrowed the technological gap.

Although BYD was China’s largest automaker in 2025, it dropped to fourth place in the January–February period as sales recorded their steepest decline since the COVID-19 pandemic.

The company also reported weaker financial performance.

Net profit fell 19% to 32.6 billion yuan ($4.72 billion) in 2025, marking its first annual decline in four years and exceeding analysts’ expectations of a 12.1% drop, according to LSEG data.

Revenue rose just 3.5%, the slowest pace in six years. For the December quarter, profit declined 38.2% to 9.3 billion yuan, extending a three-quarter streak of falling earnings.

Margins have also come under pressure. Gross profit margin from autos and related products slipped to 20.5%, down 1.8 percentage points from the previous year.

Price wars and demand pressures

BYD’s performance has been hit by price competition in China, where aggressive discounting has weighed on profitability.

Softer domestic demand has compounded the challenge, creating a difficult operating environment heading into 2026.

The company has also taken cost measures, cutting its workforce by 10.2% to 869,622 employees by the end of 2025.

Analysts said the earnings outlook remains challenging, with intense competition and weaker demand likely to continue pressuring margins despite growth opportunities elsewhere.

Overseas expansion seen as key growth driver

Despite domestic headwinds, BYD is increasingly focused on international markets.

The company told analysts during its post-earnings call earlier this week, that it is “highly confident” of achieving its 2026 overseas sales target of 1.5 million vehicles, or potentially higher.

The company had earlier set an export target of 1.3 million vehicles for this year, lower than previous expectations of up to 1.6 million units shared with Citi in November.

Overseas sales have already grown rapidly. Their share of total sales more than doubled to 22.7% last year and rose further to 50% in the first two months of the year.

BYD is pursuing expansion through localisation. The company’s factories in Europe and Indonesia are expected to begin mass production around March or April, according to one of the sources.

This shift reflects a broader strategy to offset slowing growth in China by building a stronger global presence.