Shares of Chinese electric-vehicle giant BYD fell nearly 5 per cent in Hong Kong on Monday after its first-half results exposed continuing pressure in its home market.
The decline followed BYD’s interim results on Friday. Investors weighed a quarterly profit recovery against weaker six-month earnings, falling revenue and fierce competition across China’s automotive industry.
Quarterly profit rebounds but revenue slips
BYD’s second-quarter net profit reached 8.2 billion yuan, or about $1.2 billion, according to Citi. Profit increased 30 per cent from a year earlier, marking its first quarterly rise in more than a year.
However, quarterly revenue fell 3 per cent to 194.6 billion yuan. The result showed that improving profitability had not yet restored revenue growth.
For the six months ending June 30, BYD reported revenue of 344.8 billion yuan. That represented a 7.1 per cent decline from the same period in 2025.
Net profit attributable to shareholders dropped 20.5 per cent to 12.3 billion yuan. BYD linked the decline to weakness in its new-energy vehicle business and foreign-exchange losses.
The company’s Hong Kong-listed stock fell around 5 per cent during early trading. The sell-off suggested investors remained concerned about whether the second-quarter improvement could continue.
China competition squeezes BYD margins
BYD said China’s auto industry experienced “sluggish domestic demand and robust export growth” during the first half.
Consumers remained cautious as purchase incentives changed and tax exemptions for new-energy vehicles were phased out. Industry competition also intensified as new brands and models fought for market share.
Automakers faced higher prices for commodities, raw materials and computer chips. BYD said these pressures further squeezed industry profit margins.
Official industry figures cited by BYD showed China’s total vehicle production fell 4 per cent during the period. Sales declined 4.1 per cent to about 15 million units.
Despite the slowdown, Chinese new-energy vehicle sales increased 7.3 per cent to 7.45 million units. Monthly domestic penetration also moved above 60 per cent.
Exports provide powerful growth engine
BYD’s exports surged 67.8 per cent from a year earlier to 792,000 vehicles. Overseas expansion helped offset softer demand and intense price competition in China.
Reuters reported that overseas operations generated 53 per cent of BYD’s total revenue. The overseas gross margin reached 22 per cent, while the group’s overall first-half margin improved to 18.85 per cent from 18.01 per cent.
BYD also reported strong demand for its higher-end brands. Combined sales of FANGCHENGBAO, Denza and Yangwang rose 61 per cent year on year.
Those brands accounted for 12.8 per cent of the group’s passenger vehicle sales. BYD said new technology and product updates supported their growth despite domestic pressure.
Analysts remain cautiously optimistic about the remainder of 2026. Citi expects BYD’s third-quarter core earnings to reach 13.5 billion yuan.
The bank forecasts full-year net profit of 41.2 billion yuan, which could exceed market consensus by 8 per cent. That outlook depends heavily on continued export growth and BYD’s ability to defend margins against rising costs and aggressive Chinese rivals.
