BYD Stock Hits One-Year Low Amid Auto Selloff

Key Points on Automaker Stock Decline

Shares of BYD Co Ltd fell to a one-year low, leading a significant selloff among Chinese automaker stocks. The decline followed reports of weaker sales in January, largely attributed to a revised government subsidy scheme that impacted budget-friendly car brands. The market reaction highlights growing investor concern over a potential slowdown in China's automotive sector.

Overview of the Market Situation

China's auto market is facing increased pressure from softening domestic demand and less generous policy support. This is compounded by intense price competition eroding profit margins and a narrowing technology gap among competitors. The China Passenger Car Association has forecasted stagnant car sales for the current year, noting that the robust export growth seen in 2025 is unlikely to be sustained.

Impact on the Economy and Market

BYD’s Hong Kong-listed shares closed down 6.9%, marking their largest single-day drop since May 2025. Its mainland-listed shares also fell 4.2%. The negative sentiment spread to peers, with Geely, Leapmotor, and Xpeng shares declining between 1.2% and 6.8%. In January, BYD's sales fell for the fifth consecutive month, and it was outsold by rival Geely Auto.

Outlook and Summary

To combat the domestic slowdown, BYD plans to introduce product innovations and is seeking faster growth overseas. While sales outside China grew 43.3% in January, the company has lowered its overall overseas shipment target for the year. Investor sentiment has also been affected by Warren Buffett’s Berkshire Hathaway, a long-term investor, fully exiting its position in the automaker last year.

FAQ

Q: Why did BYD's stock price fall sharply?
A: The stock price fell primarily due to weaker-than-expected January sales figures, which were impacted by revised government subsidies, intense competition, and softening domestic demand.

Q: Are other Chinese automakers affected by this trend?
A: Yes, the selloff was broad, affecting other major Chinese automakers including Geely, Leapmotor, Xiaomi, and Xpeng, which also saw their stock prices decline.

Q: What is BYD doing to address the sales decline?
A: BYD is focusing on launching new vehicle models and expanding its presence in overseas markets to offset the weakness in its domestic sales.

Source: Investing.com