A has asked its suppliers to accept price cuts next year, signaling that the Chinese automaker is bracing for a brutal intensification of the price war in the world’s biggest auto market.
A screenshot of an email purportedly sent by the Shenzhen-based auto giant was circulating on social media on Wednesday, demanding 10% price cuts from an unnamed supplier starting in January.
“Annual negotiation with suppliers is a common practice in the automotive industry,” said Li Yunfei, director of public relations and branding from BYD, in response to the email in a Weibo post on Wednesday. “We presented price reduction targets to suppliers. They are not mandatory requirements. We can negotiate.”
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The email indicates that the electric vehicle maker is positioning itself for more discounts next year. The price war in China’s automotive market, which has lasted at least two years, has triggered a wave of consolidation and pushed smaller players to the brink of extinction.
Western manufacturers, such as and , have teamed up with Chinese manufacturers like Xpeng and Leapmotor to try to leverage their electric vehicle expertise, while the brand premium Electric vehicle manufacturer HiPhi and Shanghai-based WM Motor are mired in bankruptcy proceedings.
So far, BYD has managed to come through the turmoil largely unscathed, if not strengthened. The company began a new round of industry-wide price cuts earlier this year, gaining market share and putting pressure on weaker competitors.
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The automaker continues to record record levels of sales and revenue. In the most recent quarter, BYD’s revenue surpassed that of BYD for the first time and its gross margin rose to 21.9%, its highest level in a year.
The electric vehicle maker has grown to become China’s best-selling car brand, having sold around 3.2 million plug-in hybrid and electric vehicles this year, including a record half a million cars in October. It is on track to sell at least 4 million units by the end of the year.
© 2024 Bloomberg L.P.
