Chinese Automaker BYD Goes Upmarket To Fight Sales Slump

By Blake Z. Rong | August 31, 2011
With backing from Warren Buffett, BYD is the only Chinese car company with any presence in America. The company has ambitious plans to expand its electric-car offerings and develop its own advanced batteries, but those come at a steep price. The company is now floundering: it's running out of funds, thanks to slow sales of its gasoline-powered cars. BYD haven’t started selling cars in America, but their battery development promises to supply carmakers like Nissan and GM with advanced, range-extending units. But BYD has a way out of this slump, according to a key executive in America: it's got to go upscale. Consumers in China are responding well to two new BYD cars, the S6 crossover that was released this year, and an upcoming large sedan known as the G6. The two vehicles are larger and more luxurious than the compact runabouts BYD has been building since 2003.
“Our strategy is to focus more on premium-feel cars, and we are also focusing on introducing more green cars,” said Stella Li, a BYD executive who is based in Los Angeles. BYD is focusing on targeting the upscale market as Chinese consumers move from their first to their second cars, gain a little savvy in their purchasing decisions, and spend a bit more money to boot. Challenges still abound, however. Industry analysts doubt the move upmarket will work: Chinese consumers have shunned homegrown luxury cars, preferring German or Japanese brands. Even though large luxury crossovers are uncharted territory from its line of compact cars, BYD's S6 isn't a groundbreaking vehicle, considering that its styling is suspiciously derivative of the Lexus RX. Not to mention that the idea of an upscale Chinese automaker sounds bizarre to many. But hey, they said that about Hyundai too. If BYD’s fortunes hold, it'll be building 10,000 S6s a month. If BYD manages to live up to its cheery optimism, we may see its battery plans come to fruition—which will surely give Buffett a good return on investment.