Amid intense price competition in the Chinese automotive market, leading companies like BYD and Geely are improving profitability through overseas sales. While they face sluggish sales and pressure to lower prices domestically, they are boosting performance by increasing sales in foreign markets where they can charge relatively higher prices.
BYD, China's largest automaker, announced on October 29 that its net profit for the third quarter reached 10 billion yuan (approximately $2.8 billion), a 28% increase compared to the same period last year. Revenue rose 13.6% to 211.5 billion yuan. Geely also reported a third-quarter net profit of 4.8 billion yuan, up 28%, with sales expanding by 10% to 99 billion yuan.
The improvement in performance for both companies was driven by overseas sales. From January to September, BYD sold 1.34 million vehicles to international customers, a 92.7% increase year-on-year. In contrast, domestic sales fell by 30.2% to 1.79 million vehicles. Geely, which produces both internal combustion and electric vehicles, saw its exports surge by 169% to 797,670 units during the same period, while domestic sales dropped by 23.3% to 1.44 million vehicles.
The increase in overseas sales has led to higher net profits. Nick Lai, head of Asia-Pacific automotive research at JP Morgan, estimates that the average net profit per vehicle for Chinese automakers in the domestic market is only about 5,000 yuan, while in overseas markets, it is approximately 20,000 yuan, four times higher. The domestic market is characterized by fierce competition, making it difficult to raise prices. However, competition in foreign markets is relatively relaxed, allowing for higher pricing without the intense price wars seen in China.
The China Passenger Car Association (CPCA) predicts that Chinese automakers' overseas sales will reach 12 million units this year, a 44% increase from 8.3 million units last year, significantly exceeding the previous forecast of 10 million units by the China Association of Automobile Manufacturers.
Conversely, the domestic market is facing increasing challenges. From January to September, domestic sales for Chinese automakers totaled 15.3 million units, a 21.7% decrease compared to the same period last year. Currently, there are about 30 specialized electric vehicle manufacturers in China, but only 7 are expected to be profitable by 2030.
* This article has been translated by AI.
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