China's BYD sees up to 15 pct auto sales growth in 2011

BYD Co Ltd , a Chinese carmaker backed by US billionaire investor Warren Buffett, expects its auto sales to rise up to 15 percent in 2011, in line with the market.

The automaker reported Sunday a worse-than-expected 94 percent drop in fourth-quarter earnings, sending its stock down as much as about 10 percent Monday morning, its lowest in about two weeks.

"China's auto market is facing challenges this year such as fading out of subsidies for buying cars and Beijing (local) government's measures last December to tackle congestion," Chairman Wang Chuanfu told a media conference.

"It will be difficult for the market to maintain the growth like last year. It can only grow about 10-15 percent," he said.

Auto sales in China surged by a third to a record high in 2010, partly fuelled by favourable government policies.

But Shenzhen-based BYD, hit by a contraction in gross margins, reported a profit of 90.9 million yuan ($13.8 million) for the final quarter of 2010, only a 10th of what analysts had expected. The company's 2010 auto sales rose about 10 percent to more than 500,000 units, but it missed its 600,000 target, which was already lowered from 800,000.

In January and February, BYD's sales fell 15 percent and 22 percent respectively. The company responded by cutting prices by up to 19 percent. Analysts said increased selling expenses and a drop in average selling price squeezed BYD's profit margin last year.

Reuters