(Adds share performance in Shenzhen in eighth paragraph.)
July 13 (Bloomberg) -- BYD Co., the Chinese automaker part- owned by Warren Buffett’s Berkshire Hathaway Inc., said first- half profit dropped as much as 95 percent after sales fell because of the end of preferential taxes for small cars.
Net income for the six months ended June 30 may be 121.1 million yuan ($19 million) to 363.2 million yuan, compared with 2.42 billion yuan a year earlier, according to a preliminary forecast filed to the Hong Kong stock exchange yesterday. The Shenzhen, China-based automaker had an 84 percent decline in first-quarter profit.
“There was a decline in automobile sales volume and revenue as a result of cancellation of preferential tax policy on passenger vehicles with emission below 1.6 liters and intensifying market competition,” BYD said in the statement.
BYD’s vehicle sales fell for 11 straight months through June, dropping 8 percent last month to 32,515, as demand slowed and rivals including General Motors Co. and Nissan Motor Co. introduced new models. The decline in June compared with a 6.2 percent industrywide increase in deliveries of cars to dealers, the China Association of Automobile Manufacturers said last week.
Chinese auto sales have increased at a slower rate this year after surging 32 percent to a record in 2010, as the government phased out incentives and imposed purchase restrictions to curb traffic congestion.
BYD’s handset component and assembly business declined because one of the company’s major customers deferred some sales orders, according to yesterday’s filing. The company said the financial information was prepared in accordance with Chinese accounting standards.
Berkshire Vice Chairman Charles Munger said July 2 that BYD has the ability to recover from missteps and that its executives “just put their head down and try harder” when they fail.
BYD dropped 6.1 percent to close at HK$23 in Hong Kong trading yesterday, before the filing. The shares have dropped 44 percent this year, compared with the 6 percent decline in the city’s benchmark Hang Seng Index. The company’s Shenzhen-traded shares have risen 75 percent since their June 30 debut.
--Editors: Chua Kong Ho, Terje Langeland
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