BYD: to recover its sales by launching models based on new technologies

Su Rui sedan with remote driving control; new PHV Qin to be released in late 2012

2012/09/10

Summary

 Since its establishment in 1995, BYD has been known as a rechargeable battery manufacturer producing nickel and lithium ion batteries. It expanded its business into the automobile market with the acquisition of Xi'an Qinchuan Automobile, a Chinese compact vehicle manufacturer, in 2003. BYD is focused on researching and developing new energy vehicles, utilizing its experiences from the rechargeable battery business. It launched the world's first plug-in hybrid vehicle (PHV, It's called Dual Mode electric vehicle by BYD), the F3DM, at the end of 2008. This report will outline BYD's recent activities surrounding its automobile business.

 After its rapid growth peaked in 2009, BYD's sales volume ceased its growth due to troubles with its dealers and the stalled growth experienced throughout Chinese brands (original brands established by Chinese manufacturers). The annual sales volume for 2011 was down 13.7% from the previous year to 450K units, and the sales volume for the January to June 2012 period was down 11% from the previous year to 210K units. The decline in sales was especially prominent with its major models, the F3 (including two box vehicles), F6, and F0 which used to account for nearly 90% of the sales volume (as of 2010). Its sales took a big plunge, dropping 51.1% from the previous year to 90K during the first half of 2012.

 In its effort to recover its sales volume, BYD is focused on developing new technologies and the aggressive introduction of its new models to different markets. The automaker enhanced its product portfolio with the launch of its first urban SUV, the S6, in May 2011, and a middle to high-end sedan, the G6, in September. In 2012, a new grade of G6 driven by a powertrain with a 1.5-liter direct injection turbocharged engine combined with a 6-speed DCT (dual clutch transmission) was launched in May, and the world's first model equipped with remote driving control technology, the Su Rui, was launched in August. Moreover, a new PHV (plug-in hybrid vehicle), the Qin, with DM II, an improved version of F3DM's drive system, DM (Dual Mode), is scheduled to be launched later this year.

 Contrary to the decline in total sales volume, its revenue continued to grow slightly for 2011 and for the first half of 2012, thanks to the sales of the S6 and G6 models, which are priced higher than the existing models. However, the mobile handset components and assembly service, one of BYD's major businesses, decreased its sales from declined sales of its major accounts, while rechargeable battery and new energy business also decreased its sales from a decline in mobile and computer market as well as from depression in Europe. BYD as a whole took a big plunge for both 2011 and the first half of 2012. The revenue for automobile business, which is currently showing slight growth, is expected to stay the same for the January to September period y/y due to the sluggish market.

 In efforts to recover its worldwide sales, there are some new activities regarding new energy vehicles. In China, BYD showcased its new PHV, the Qin, at the Auto China 2012. The joint venture with Daimler showcased its first concept car under its EV brand, Denz. BYD has been producing its own developed models as a private automaker, and Denz will be its first joint-developed model with a foreign OEM. As for markets outside of China, the OEM is focused on introducing its large-size EV bus, the K9. Test demonstrations for this model are set to begin in Denmark and Finland. BYD sealed delivery deals of the K9 in markets including developed countries such as Canada, the Netherlands, and Uruguay. For now, BYD will focus on bus and rental car markets in North America.


Related Reports: Beijing Motor Show 2012 (1) (May 2012)



Sales volume: growth rate of sales volume starts to lag after peaking in 2009; first half of 2012 declines 11% y/y

 After achieving a 162.4% y/y increase in 2009, the growth rate of BYD's sales volume has continued to drop. BYD originally set its annual sales target at 800K units for 2010, but by the latter half of that year, it was forced to make a downward revision to 600K units due to its sluggish sales. That same year, dealers throughout China objected to BYD's policy which forced them to hold excessive stocks, broke away from BYD's sales network. This, in addition to the sluggish sales, is believed to be the direct cause leading to downward revision of its sales target. In the end, BYD was unable to reach its target with a sales volume of only 520K units for 2010. Its sales volume dropped even further to 450K, a 13.7% decline y/y, in 2011, from sluggish sales of Chinese brands. The market share of Chinese brands continues to decline in 2012 down 11.0% y/y to 210K units during the first half of this year, which is less than half of the year-round sales target of 470K units.

 According to reports by local media, Wang Chuanfu, BYD's Chairman, believes the biggest cause of its sluggish sales is in the quality of its product. The rapid growth, which continued until 2009, made BYD focus too much on expanding its sales network and putting less effort to marketing and quality improvement. Local dealers increased from approximately 100 to 1,200 during the five-year period ending in 2010. However, the number of dealers declined to 857 by the end of 2011 with dealers breaking away and also from sales network restructuring.

Sales volume by model

(units)
Segment Models 2007 2008 2009 2010 2011 Jan.-Jun.
2011
Jan.-Jun.
2012
Total of passenger cars 100,126 170,882 448,397 519,806 448,484 232,419 206,867
Sedan,
Hatchback
Flyer 1,650 173 0 0 0 0 0
F3 93,033 131,146 250,161 212,438 166,847 99,471 67,275
F3R (F3 2box) 5,443 5,636 40,802 51,509 16,544 13,371 935
F6 - 10,250 52,440 51,651 12,894 11,520 419
F0 - 23,677 102,931 148,457 82,603 56,737 20,013
F3DM (PHV) - - 48 417 613 313 601
S8 - - 96 8 0 0 0
G3 - - 1,919 50,416 54,677 29,922 14,725
G3R (G3 2box) - - - - 6,303 2,456 2,548
G6 - - - - 7,668 0 19,508
e6 (EV) - - - 63 401 4 607
L3 - - - 2,128 36,901 11,968 34,094
MPV M6 - - - 2,719 2,835 1,814 593
SUV S6 - - - 0 60,198 4,843 45,549
Total of commercial vehicles (Buses) - - - - 323 11 2
BYD's Total 100,126 170,882 448,397 519,806 448,807 232,430 206,869

 

 



Performance: achieves slight increase with launch of new model; overall profit takes plunge due to bad performance of other sectors

 Despite its decreased sales volume from stagnation of its major models such as the F3 and F6, the automobile sector's revenue showed a slight increase for both 2011 and the first half of 2012 from booming sales of higher-priced new models. An urban SUV, the S6, and a middle to high-end sedan, the G6, both launched in 2011, are especially doing well. The revenue for FY 2011 was up 2.7% y/y to 22.1 billion RMB and the first half of 2012, up 12.3% y/y to 10.7 billion RMB.

 However, the declines in mobile handset components and assembly service, rechargeable battery and new energy businesses caused the downfall of the entire company. The revenue for 2011 was down 0.8% y/y to 46.3 billion RMB, and the net profit was down 45.3% to 1.6 billion RMB. The revenue for the first half of 2012 was down 0.4% y/y to 21.4 billion RMB, and the net profit was down 73.6% to 100 million RMB.

 In response to this downturn in business, BYD began staff and bonus cutbacks, as well as issuing bonds from 2011. As of June 2011, there were around 185K employees working for BYD. By the end of the year, they were cutback to 178K after its big layoff in the latter half of that year. Moreover, the company announced in June 2012, that it will reduce employee's bonus rates until September, and it will issue 3 billion RMB worth of corporate bonds, spending 1.5 billion RMB to pay back its bank loan.

BYD's consolidated financial results

(100 million RMB)
Account title 2007 2008 2009 2010 2011 Jan.- Jun.
2011
Jan.- Jun.
2012
Revenue 212 268 395 467 463 215 214
Automobiles and related products 49 86 210 216 221 95 107
Mobile handset components and assembly service 92 119 144 206 196 95 85
Rechargeable batteries and other products 71 62 41 46 46 24 22
Cost of sales 170 216 309 384 394 185 188
Gross profit 42 52 86 83 69 30 26
Profit before tax 17 14 45 31 17 5 2
Profit for the year 17 13 41 29 16 4 1

Note: Profit for the year includes net profit attributable to parent company and minority interests.

 



Production operation: scheduled construction of EV manufacturing plants in and out of China

 BYD is focused on introducing EV buses in and out of China. In July 2012, BYD entered into a joint venture agreement with a local bus company run by the Government of Tianjin City relating to the construction of an EV bus plant. The company will construct a production and export base as well as an R&D center for EV buses in Wuqing District, Tianjin City under this agreement. Depending on the market, it may also develop and produce EV trucks.

 In November 2011, the OEM entered into a collaborative outline with Argentina's Ministry of Industry regarding the construction of an EV bus manufacturing plant. This is expected to serve as an export base for the MERCOSUR market.

BYD's domestic plants

(Production capacity: units)
Plants as of
August 2012
Plan Models
Xi'an Plant,
Shaanxi Province
First Plant 400,000 400,000 F3, F3R, F3DM,
G3, G3R, L3, Su Rui
Second Plant Plan is afoot 200,000 -
Shenzhen Plant, Guangdong Province 200,000 200,000 F6, F0, e6, M6, S6, G6
Changsha Plant, Hunan Province PCs:n.a.
K9:1,200
PCs:50,000
K9:1,500
(By the end of 2012)
K9, 6B
Tianjin Plant Plan is afoot 10,000 K9
BYD's Total production capacity 601,200 861,500 -

 

BYD's overseas KD plants

Countries Business partners Plants Production
forms
Models
Syria Hmisho Hmisho's Plant (Homs) SKD F3
Russia TagAZ Taganrog Automobile Plant (Taganrog) KD F3
Iraq Zamzam Spring
Group
State Company for Automotive Industry (SCAI),
which is part of the Ministry of Industry and Minerals
(Iskandariyah, south of Baghdad)
SKD F3, F6, F0, G3
Sudan Giad Group Giad's Plant SKD F3
Egypt Al Amal Joint venture plant with Al Amal (Cairo) CKD F3
Argentina Argentina's Ministry
of Industry
n.a. n.a. EV bus

 

 



New model launch plan: launching of a new model equipped with remote driving control technology, the Su Rui

 In its effort to recover its sales volume, BYD is focused on developing new technologies and introduction of new models. In March 2012, BYD launched a first new grade of G6 driven by a new powertrain with a 1.5-liter direct injection turbocharged engine combined with a 6-speed DCT. It also began its national sales of the world's first model fitted with remote driving control technology, the Su Rui, in August. The driver can control this vehicle remotely in low speed using a remote control within a certain range with this function. This will save drivers the trouble of not having enough space to get out of their cars in parking lots with limited space, and having to walk to the vehicle through bad weather.

 BYD will also launch its second PHV, the Qin, during the latter half of this year. This model incorporates a DM improved driving system called DM II, which enables drivers to switch between EV and HV driving modes.

Models Release time Outline
G6 with DCT March 2012  A new grade addition to a B class sedan, the G6, launched in September 2011. This is the first of its grade to be driven by its new powertrain technology, Ti+DCT, announced at the Auto Shanghai 2011. It is powered by a 1.5-liter direct injection turbocharged engine (TI) combined with a 6-speed DCT. The maximum output is 113kW/5200rpm and the maximum torque is 240Nm/1750-3500rpm. It is priced at 115.8K RMB.
2012 F0 May 2012  A face-lifted model of the A00 class hatchback, the F0. Its standard model is equipped with a keyless entry system and an engine/vehicle anti-theft system. It is priced between 36.9K and 46.9K RMB.
2013 S6 July 2012  A face-lifted model of the BYD's first urban SUV, the S6, launched in May 2011. With an addition of five grades, the model now has eight grades. It is priced between 89.9K and 136.9K RMB.
Su Rui August 2012  An A+ class sedan debuted at the Auto China 2012. There are seven grades, priced between 65.9K and 99.9K RMB. Based on an A class sedan, the F3, it measures 4,680mm in length, 1,765mm in width, 1,490mm in height with a wheelbase length of 2,660mm. This will be offered with three different powertrain types combining a 1.5-liter direct injection turbocharged engine with either a 6-speed DCT (Ti+DCT technology) or a 6-speed MT (manual transmission), or a 1.5-liter engine with a 5-speed MT. It also comes with the world's first "remote driving control" technology which allows drivers to remotely control the vehicle within a 10m radius visible range in low speed (under 2km/h).
Qin The second
half of 2012
 See "New energy business" section for details.
New L3 2013  A remodeled version of an A class sedan, L3. The vehicle will be powered by a proprietary developed 1.2-liter direct injection turbocharged engine. This engine will be announced in late 2012, and the new L3 model is expected to be released in 2013.
New G3 2013  A remodeled version of an A class model vehicle, the G3. It will be equipped with a new powertrain combining a 1.5-liter naturally-aspirated engine with a 6-speed DCT.
6B
(Development code)
2013  A middle to high-end vehicle lined off at the Changsha plant in Hunan Province in May 2012. This model is the first passenger car manufactured at this plant. 4,870mm x 1,830mm x 1,460mm (LxWxH). Wheelbase 2,755 mm. It is powered by a 1.5-liter direct injection turbocharged engine combined with a 6-speed DCT (Ti+DCT technology). This will come with an "i" system and "i robot" also equipped on the Qin.

 

 



New energy vehicle: announces new PHV, the Qin; promotes foreign market sales of new energy vehicles

 In China, in addition to its launch of the new PHV, the Qin (mentioned previously), during the latter half of 2012, BYD will also market the first model of its joint brand with Daimler, the Denz, in 2013. The automaker is also expanding its regions for running test demonstrations and supplying a large-size EV bus, the K9, outside of China. In Friesland, located in the northern part of the Netherlands, BYD won a competition with Europe's leading bus OEMs and received an order for six large-size EV buses. The company aims to receive more recognition in various markets including developed countries.

Current lineup of new energy vehicles

Models Release time Outline
F3DM August 2008  The world's first mass production PHV. This model was introduced in late 2008 targeting government and bank uses, later expanding its sales target to personal use in May 2010. Fitted with a DM system comprised of an engine and a motor, this vehicle can switch between EV and HV driving modes. The term "Dual Mode" is used to describe this function because the driver can choose from two driving modes. It is powered by a proprietary developed lithium iron phosphate battery, ET-POWER (It's called Fe battery by BYD).
Qin Second
half of 2012
 A new PHV introduced at the Auto China 2012. 4,740mm x 1,765mm x 1,490mm (LxWxH). Wheelbase 2,660mm. This model will come with DM II, an improved F3DM's drive system, DM (Dual Mode). Powered by a 1.5-liter direct injection turbocharged engine, it can output up to 223kW and up to 440Nm of torque under HV mode. The battery capacity is 10kWh. The maximum output is 110kW, and cruising range is 50km under EV mode.
 The model is equipped with an onboard network system "i", utilizing telematics and cloud computing technologies, and a humanoid robot called "i robot" which communicates with drivers using facial expressions, gestures, and words. The "i" system provides drivers with a variety of useful tools such as 24-hour support service, rescue service, vehicle location, and cloud service. The "i robot" is normally stored in the dashboard and automatically activated when the driver starts the engine.
e6 May 2010  A cross-over type EV model which integrates features from MPV and SUV. Test operation for taxies began in Shenzhen from May 2010. In October 2011, the OEM began its sales to individual users in Shenzhen. The vehicle is powered by a lithium iron phosphate battery, ET-POWER. It has the maximum output of 90kW and the maximum torque of 450Nm. The energy consumption rate is 19.5kWh/100km, and the maximum cruising range is 300km. The vehicle for individual users is called the e6 Xianxingzhe. As with the F3DM, it is sold mainly in test cities for new energy cars such as Shenzhen, Hangzhou, Beijing, and Shanghai.
K9 January 2011  A large-size EV bus measuring 12m in length. It lined off in September 2010, and began its test run as a public bus in Shenzhen and Changsha from January 2011. In November of the same year, BYD reduced 1.2 ton from the weight of the body by incorporating wheels and fastener parts as well as full aluminum alloy body developed for the K9 from Alcoa, America's leading producer of aluminum. It is powered by a lithium iron phosphate battery, ET-POWER. When charged in rapid mode using a special charger, the battery can be charged to 50% in 30 minutes. The roof of this vehicle is equipped with solar panels which can be used as a supplementary battery charging function. The cruising range exceeds 250km, and it can be extended to more than 300km if the A/C is turned off. This model is in full operation or is going through a test run in Shenzhen, Changsha, Shaoguan (Guangdong Province), and Xi'an.

 

BYD to focus on EV bus and EV rental car markets in North America

 BYD's new energy car business in North America has not extended beyond public transportations and operations in airports. Sales targeting individual users and local production are yet to begin. In October 2011, it opened an office in Los Angeles becoming the first Chinese automaker to open its headquarters in North America. However, it is currently focused on the distribution of EV buses and EV rental cars.

Sales status of new energy vehicle

F3DM  In December 2010, BYD established a partnership with the Housing Authority of the City of Los Angeles (HACLA). It supplied 10 F3DMs for one year fleet testing. The agreement was extended in November 2011, adding seven more F3DMs to be tested from January to December of 2012.
e6  BYD expects to acquire a U.S. sales license by the end of 2012. The automaker will limit its initial sales to the rental car market via The Hertz Corporation, America's top rental car company. The OEM plans to start sales for individual users when the battery charge infrastructure in the U.S. is established. It was originally planned to enter the market during the latter half of 2010.
K9  This model is in operation as a shuttle bus at Los Angeles International Airport supplied through Hertz.

Note: In August 2011, Hertz entered in to agreement with BYD and already offers rental car services in China with the e6 vehicles. The service is currently available in Shenzhen only, but it is planning to expand its service to Beijing and Shanghai.

 

Establishment of EV R&D center in Hong Kong

 BYD established an EV R&D center in Hong Kong Science & Technology Parks. BYD will research and develop EV models for Hong Kong's public transportation by collaborating with Hong Kong Automotive Parts and Accessory Systems R&D Centre (APAS) and Hongkong Productivity Council (HKPC). The company hopes to make this experience in the Hong Kong market to make its way into the European market.

 

Promoting foreign development of the large-size EV bus -- K9

Countries Business partners Outline
Denmark  In March 2011, BYD established partnership with Denmark's biggest public transportation company, Movia. It operates 570 lines providing services to 2.4 million customers, which covers about half the population of the nation.  Two K9s are planned to be tested. The deliveries of the vehicles have been completed in July 2012 to be tested in Copenhagen for two years.
Singapore  In June 2011, BYD signed a memorandum of understanding with SMRT International Pte Ltd. which provides operation services to transportations around the world. SMRT Corporation Ltd is the sole owner of SMRT International, which operates transportations such as subways, buses, and taxies.  Establishment of a joint venture specializing in sales of the K9 and the e6 models (taxi specific vehicle) is under consideration.
Germany  BYD entered into a partnership with the government of Frankfurt in June 2011.  Three K9s will be delivered during the first quarter of 2012. They will be used as a shuttle bus at Gateway Gardens.
Finland  In March 2012, BYD partnered with Veolia Transport Finland Oy, a public transportation company. Veolia Transport is an affiliate of Veolia Transdev, the world's leading private public transportation company.  Vehicles will be tested in Espoo, located in the southern part of Finland, for three years. The vehicles will be tested for resistance to temperature differences in Espoo where there's extreme temperature changes throughout the year, to determine the possibility of introducing its product to the country's public transportation.
Canada  In May 2012 in Windsor, a city in southwestern part of Ontario, a transportation company, Transit Windsor partnered with BYD. Transit has a transportation network in most parts of Canada and in Detroit.  10 K9s will be introduced to its public transportation. Another two units are planned to be added this fall. BYD is planning to construct a local production plant to provide its vehicles to the North American market directly.
Netherlands  In June 2012, BYD acquired the right to supply large-size EV bus to the government of Friesland. This was the first time large-size EV buses were openly bid in Europe.  Six K9s are planned to be delivered to Schiermonnikoog, an island in the northern part of the Netherlands around the end of 2012. It also entered into a 15-year agreement regarding maintenance and technical support services.
Chile  BYD received orders from its local agent, Indumotora, and Alsacia, Santiago's leading public transportation company in June 2012.  Five K9s will be delivered.
USA  BYD received an order from the University of Utah in July 2012.  One K9 will be delivered to be run as circulating bus within the premises.
Uruguay  In July 2012, BYD partnered with a local company, CTS Auto S.A., and Buquebus, the nation's biggest travel agency.  One K9 will go into full operation by the end of 2012. It is planned to expand to 500 units by 2015.
Israel  In August 2012, BYD partnered with a public transportation company in Tel Aviv, Dan Bus, and BYD's local distributer, Clal Motors.  Half of DAN Bus's vehicles are planned to be replaced by K9. A total of nearly 700 units will be delivered in the future.

 

 



Joint venture with Daimler: announces the first concept car of its EV brand, Denz

 BYD established Shenzhen BYD Daimler New Technology Co., Ltd., a joint venture with Daimler's wholly owned subsidiary company (Daimler Northeast Asia Ltd.) on a fifty-fifty basis, in Shenzhen in July 2010. This joint venture will act as an R&D center for EVs targeting Chinese market. Therefore it does not have its own production site. Products will be distributed to markets through its own sales channel different from BYD or Mercedes-Benz models.

Denz Brand  The Denz brand was announced in Shenzhen as China's first EV specializing brand in March 2012. The joint venture will combine BYD's battery technology with Daimler's designing/manufacturing technologies to develop Chinese models.
First concept car  A first concept car of the Denz brand was showcased at the Auto China 2012. 4,699mm x 1,895mm x 1,580mm (LxWxH) with wheelbase length of 2,880mm. According to reports by local media, it is suspected that this model was built on Mercedes-Benz's B class model. It is equipped with a BYD battery, motor, and ECU on Daimler's framework and safety equipments. Drivers can access the charging inlet by sliding up the logo located on the front grill. This concept car will be launched to market in China in the latter half of 2013 after showcased at the Auto Shanghai 2013.
Production base  Because the joint venture has not yet acquired necessary production license from the Chinese government, BYD will add new lines to its Shenzhen plant to produce this model under a contract.

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