BYD Shares Plunge to Nine-Month Low Amid Domestic Market Struggles

Shares of Chinese electric vehicle manufacturer BYD experienced a dramatic sell-off, closing at their lowest point in nine months following a troubling financial report. The company revealed a staggering 33% drop in net profit despite recording higher revenues, marking the second consecutive month of declining vehicle deliveries. This downturn raises significant questions about the former market leader's ability to reverse its current downward trajectory.

The disappointing October sales figures, released just days after BYD's third-quarter earnings report on October 30, triggered substantial pressure on the Hong Kong-listed shares. The automaker's net profit plummeted 32.6% to 7.82 billion RMB, while gross margins contracted by 6.13 percentage points to 17.61%.

China's increasingly competitive electric vehicle landscape has become particularly challenging for BYD. The company faces stiff competition from established rivals including Geely Auto and emerging contenders such as Leapmotor and Xiaomi. This heated environment has produced several concerning developments:

• Domestic market share has declined from 18% to 14% within a single year
• The 2025 sales target has been revised downward by 16% to 4.6 million vehicles
• Aggressive discounting has been implemented on popular models like the Qin Plus

With approximately 80% of BYD's sales occurring within China, the company has been compelled to implement substantial price reductions in its home market. These competitive pressures contributed to operational costs surging to 160.64 billion RMB.

October Sales Performance and Market Position Erosion

BYD reported selling 441,706 vehicles during October, representing a 12% decrease compared to the same period last year. More significantly, the company lost its position as China's leading automaker, slipping to second place in the domestic market rankings.

Should investors sell immediately? Or is it worth buying BYD?

International Expansion Offers Potential Relief

While domestic performance weakens, BYD's international business shows promising growth. Overseas sales surged 160% during the third quarter, with October alone recording a 169% increase. Analysts at Citigroup project the company will export nearly one million electric vehicles by 2025.

The European operation has proven particularly successful, with BYD surpassing Tesla in EU sales during August. The company is accelerating its global expansion through production facilities in Hungary and Turkey, alongside plans to establish 1,000 new retail locations across Europe by 2026.

Analyst Outlook and Future Prospects

Despite current challenges, market analysts identify several positive indicators. Morgan Stanley researchers view international sales as a crucial growth driver that could potentially offset domestic market weaknesses. The overseas business also promises higher profit margins than the fiercely competitive Chinese market.

Citigroup experts suggest a potential turnaround scenario, noting that a "repositioned" BYD could regain investor favor as early as the first quarter of 2026, provided the company successfully improves its export mix.

BYD maintains substantial long-term strengths, including research and development investments that grew 31.3% and a robust balance sheet. However, near-term performance will depend on monthly sales figures recovering and effective execution of the international growth strategy.