BYD misses 2010 sales target by over 80000 cars

Chinese auto maker BYD Co. (1211.HK) missed its 2010 sales goal by more than 80,000 cars, despite slashing the target by a quarter in August, as the Warren Buffett-backed firm contended with fierce competition and a rollback in government incentives for small-car purchases.

The Hong Kong-listed company said Wednesday its car sales in China totaled 519,806 last year, 16% higher than in 2009 but 13% below its full-year target of 600,000 vehicles.

China's auto sales growth remained strong in the first half of 2010 after the nation overtook the U.S. to become the world's biggest auto market in the previous year. But the growth rate moderated as the government began to remove stimulus measures that supported car purchases, leading BYD to cut its original 2010 sales target of 800,000 cars in August.

BYD's sales growth also lagged that of the overall market last year. The China Association of Automobile Manufacturers said domestic firms likely sold 18 million vehicles in 2010, up 32% from 2009.

Still, the Shenzhen-based company's business improved in December, with sales up 25% from November at 51,300 cars, as consumers in Beijing flocked to dealers before new rules took effect in January to limit new car purchases in the capital.

The Beijing municipal government said in December it would limit the number of new car and minivan license plates to 240,000 this year, just a third of the 2010 issuance, among other measures, to help ease Beijing's worsening traffic congestion.

Investment bank Chardan Capital said in a recent note it expects other cities in China to adopt similar measures as the nation seeks to reduce congestion and pollution.

"We view these developments as a negative for BYD and expect the company to guide modestly in the 600,000 vehicles range as a sales target for 2011," the brokerage said in the note, published last week.

BYD has yet to provide a 2011 sales target.

The company, which is 9.89% owned by MidAmerican Energy Holdings Co., a unit of Buffett's Berkshire Hathaway Inc. (BRKA), sold around 450,000 cars in 2009. The Chinese battery and car maker, which began as a manufacturer of lithium-ion and nickel batteries and later branched out into producing cars and cellphone parts, caught the attention of Buffett because of its background in battery production.

Buffett made a high-profile visit to BYD's operations in October to reaffirm his long-term interest in the company, describing the firm as a "young and energetic" company.

Some analysts had earlier expressed concern that BYD has been putting too much attention on developing battery technology at the expense of focusing on the quality of its cars. BYD's cars tend to be less expensive than competing brands and are targeted mainly at first-time car buyers.