Negative information continues BYD to find breakthroughs

Recently, BYD Company announced that, due to the lack of optimism in the external economic environment, the company’s efficiency has experienced a major decline. After the study decided to reduce employee wages, the company’s employee performance awards were uniformly lowered from June to September this year.

In the past year or so, the negative information about BYD has continued, the performance has been poor, the electric car has caught fire, and the company has cut its pay and layoffs. In the past few days, BYD’s share price has continued to fall. As of July 23, it has dropped to RMB 16.65 per share. "I hope BYD will begin to take off next year (2013) and it will not need to increase by 50% to 60%, and it will increase by 5% to 10%." Wang Chuanfu, president of BYD Auto Co., Ltd., told the media.

People can't help but ask: What happened to BYD who was once favored by Buffett and was in the limelight in the country?

Poor sales decline leads to poor performance

BYD's current embarrassment has a lot to do with the overall downturn in China's auto market. Especially since last year, the self-owned brand cars have been in trouble, and BYD has not escaped this "cold stream."

The business of BYD Company is mainly composed of solar energy business and automobile business. At present, the development of the two businesses is not good. From last year’s financial report, BYD’s automotive business accounted for 47.8% of its total operating revenue. In the first five months of this year, sales of BYD vehicles fell by 11.6% year-on-year to only 169,000 vehicles. The decline in car sales was considered by the outside world as the main reason why BYD’s overall performance was in trouble and forced to cut salaries.

The slowdown in the growth of the domestic auto market in the first half of this year has not only affected BYD but also affected the entire industry. From January to May this year, the total sales volume of self-owned passenger cars fell by 11.5% year-on-year. Statistics from the China Association of Automobile Manufacturers show that since the beginning of this year, the growth of the passenger vehicle market has been weak and independent brands have been under tremendous pressure. The market share of self-owned brand passenger vehicles has been declining for several consecutive months, with May’s share of 40.3%, down 3.3% year-on-year, and the market share has fallen by 10% from its 2010 high.

For BYD, the sales of the original models continued to decline, and sales of new models failed to fill the decline in sales of old models. Previously, F3 was the pillar of BYD's sales, and it was also a regular customer of the top ten models of car sales. Now it has already faded out of the top ten sales lineup. The new models of the G6 and S6, which represent their transformation work, are not ideal with the overall market downturn, failing to boost the sales of BYD.

In particular, BYD's first SUV model S6, although it broke through the monthly 10,000 mark soon after its listing last year, sales in April this year quickly dropped to below 5,800, which was almost at a low price. In May, sales were only 6,500 units.

Some industry insiders believe that BYD has blindly expanded its production line when the market environment is good, and its products have not been able to introduce new products in a timely manner. They rely solely on imitation, lack of independent innovation capabilities and core technologies, and are inevitably trapped in a difficult market environment.

Electric cars caught fire

On May 26 of this year, in Shenzhen, the e6 electric taxi produced by BYD was hit by fire and caused concern for the safety of new energy vehicles. The Ministry of Science and Technology and the Ministry of Industry and Information Technology immediately investigated the accident. Although the final conclusion has not yet been reached, the negative impact and losses caused by BYD have been unavoidable. Within a few days after the fire, BYD’s market value evaporated billions of yuan.

Subsequently, rumors concerning the termination of battery cooperation between Daimler-Benz and BYD were also raised, and further affected BYD's share price.

Electric vehicles are the focus of BYD's development. Historically, BYD started with batteries.

In 1995, Wang Chuanfu, former deputy director of the Beijing Institute of Nonferrous Metals, Room 301, borrowed 2.5 million yuan to establish BYD. Invested more than 1 million yuan to build a nickel-cadmium battery production line, self-built production equipment, began production of nickel-metal hydride batteries in 1997, began in 2000 lithium battery production. In 2001, BYD entered the world's second nickel-cadmium battery, nickel-metal hydride battery third, and lithium battery fourth. The best performance of BYD nickel batteries is 70% of the global market share. In 2003, BYD acquired the original Xi'an Qinchuan Automobile Co., Ltd. and entered the automotive industry.

In June 2010, the Chinese government started a subsidy policy for private consumers to purchase new energy vehicles. The development of electric vehicles began to accelerate. BYD has now put its perspective into the fields of storage power stations, photovoltaic cells, and LEDs.

The third quarter of 2011 reported that BYD delivered 200 electric buses and 250 electric taxis to the Shenzhen public transport system.

The publicly available data show that in order to lay out the new energy vehicle market, BYD acquired Ningbo Zhongwei, a semiconductor manufacturing company, for nearly 200 million yuan in October 2008, and integrated the upstream industrial chain of electric vehicles; in July 2009, it acquired 60 million yuan for Hunan America. Passenger Vehicle Manufacturing Co., Ltd.'s Sanxiang Bus, with its Changsha plant as BYD's new energy bus production base, plans to invest 2 billion to 3 billion yuan; in September 2010, it spent 200 million yuan to buy 18% stake in Tibet Zabuye Lithium Industry. .

However, the electric vehicles that BYD made with great efforts have been questioned by the industry due to a collision incident. This battery burning incident also triggered the country's further thinking about the development of new energy vehicles and postponed the introduction of new energy vehicle development plans.

In the field of new energy vehicles, BYD is difficult to ride a tiger.

Wang Chuanfu How to Achieve Redemption

How to get out of the predicament has become a difficult problem for Wang Bifu, president of BYD.

Wang Chuanfu once claimed that BYD entered the “adjustment year” in 2011 and will continue until 2013. According to analysis by industry experts, for BYD, it is still in an adjustment stage. The actual improvement of performance depends on the progress of its auto business.

Judging from recent years, the competition in the domestic low-end automobile market is gradually becoming saturated, and it is difficult for independent brands to rely on simple price wars to continue to establish a foothold. In order to get rid of the difficulties, BYD clearly needs to take a new path.

"Because BYD's sales increased by 100% for almost five consecutive years before 2010, this has reduced the company's emphasis on product quality." Wang Chuanfu said in an interview with the media, "BYD made some mistakes in the past. I Three things are summed up: network issues, corporate and media relations, and the most important one is quality."

Wang Chuanfu apparently has realized the importance of quality to BYD's development. “Quality cannot be absolutely absurd, but the quality of a joint-venture brand does not necessarily have a play.” Wang Chuanfu believes that in order to overcome difficulties, product quality must be improved. and service.

Experts in the industry suggest that the overall thinking of BYD Auto should be shifted from the price war that was good at the past to relying on quality to win and take a sound quality improvement. After all, product quality is the core element for a company to achieve success and achieve long-term development.