Source of this article: Times Finance Author: He Qing
In the head-breaking price war, BYD handed over the 2023 report card.
According to BYD's 2023 annual report released a few days ago, BYD sold 3.024 million vehicles last year, a year-on-year increase of 62%, achieved operating income of 602.32 billion yuan, a year-on-year increase of 42.0%, and net profit attributable to shareholders of listed companies was 30.04 billion yuan, a year-on-year increase of 80.7%.
In 2023, the performance and sales will fly together, and BYD in 2024 will take the lead in becoming the "price butcher". In the first quarter of this year, it intensively released the Glory version of the new car, and launched a price war through price reduction and additional allocation.
On the day of the release of the 2023 annual report, BYD once again fell behind in the 100,000-level market, and the new car Yuan UP of Dynasty Network was officially launched, with an official guide price of 96,800-119,800 yuan. Regarding the sales target of Yuan UP, Times Finance sent an interview letter to BYD, but did not receive a reply as of press time.
Image source: BYD
With 100 billion cash flow in hand, the gross profit margin of automobiles has increased instead of falling
With the release of BYD's 2023 annual report, a number of its operating data have attracted industry attention.
In 2023, BYD's revenue, net profit, and cash flow will all hit record highs. In 2023, the annual operating income will be 602.32 billion yuan, an increase of 42.0% year-on-year, the net profit will be 30.04 billion yuan, an increase of 80.7% year-on-year, and the net operating cash flow will be 169.73 billion yuan. Judging from the annual net profit, BYD earned an average of more than 82 million yuan per day.
Throughout the year, BYD maintained good profitability resilience. According to the annual report, the gross profit margin of BYD Auto, automobile-related products and other products will reach 23.02% in 2023, an increase of 2.63% year-on-year, which is higher than Li Auto's vehicle gross profit margin of 21.5%.
Image source: Screenshot of BYD's annual report
However, BYD's net profit attributable to shareholders of listed companies in the fourth quarter of 2023 was 8.67 billion yuan, which was lower than the net profit of more than 10 billion yuan in the third quarter, and the net profit decreased by 17% quarter-on-quarter. BOCOM International pointed out in the research report: "The gross profit margin in the fourth quarter was 21%, a decrease of 0.9 percentage points from the previous quarter. The fourth quarter was mainly affected by the impulse of year-end promotional price reductions, industry price wars and higher expenses at the end of the year. ”
Regarding whether the price war will affect BYD's gross profit margin, Times Finance sent an interview letter to BYD, but did not receive a reply as of press time.
In its annual report, it stated that in 2023, despite the challenges of intensified competition in the automotive industry and the cancellation of subsidies for new energy vehicles, the Group's new energy passenger vehicle business continued to maintain good profitability by virtue of its continuous improvement of brand power, rapid growth of overseas sales, continuous expansion of scale advantages and strong cost control capabilities in the industrial chain, as well as the decline in upstream raw material prices.
"It is expected that the profit of the bicycle will be under pressure, but it is more important to seize the market by exchanging price for volume. "We expect that with the launch of a number of Honor Edition models in the first quarter of this year, bicycle profits will be under pressure." But at the same time, we also observed that BYD's weekly sales returned to growth after the launch of the Honor version model, which put some pressure on the sales of peers. ”
Hold on to pricing power?
In March last year, at the investor communication meeting after the release of the 2022 annual report, Wang Chuanfu, chairman of BYD, said that BYD has pricing power in the product price band of 100,000-200,000 yuan, but the company also hopes to be stable. ”
A year later, BYD took the lead in launching a price war in February this year, and it intensively launched the Glory version of the model, advocating "electricity is lower than oil", setting off a wave of price reductions.
In February, the Qin PLUS Glory Edition and the Destroyer 05 Glory Edition were both lowered and listed, with a starting price of only 79,800 yuan. Subsequently, BYD offered the Dolphin Glory Edition with a guide price of 99,800 yuan, which was 17,000 yuan lower than the previous starting price of 116,800 yuan.
After the price adjustment of a number of 100,000-level new energy cars, models such as Han and Tang, which are more expensive, have also started to reduce prices and increase configurations.
On February 28, the two flagship models of BYD Han and Tang Glory Edition were officially launched. Among them, the price of the Han Glory version dropped to 169,800 yuan for the first time, achieving "lower electricity than oil", and fully covering the price range of mainstream German and Japanese B-class cars.
The new Honor version of the new car mainly covers the main products of Dynasty Network and Ocean Network, and these two network models are also the main support for BYD's sales. BYD believes that the main opponents of the company's Glory Edition models are fuel vehicles and joint venture brands, and after the launch of the Honor Edition, the transformation of joint ventures and fuel vehicle customers is very effective.
Ping An Securities pointed out that passenger cars below 200,000 yuan as a means of travel attributes are stronger, in the price band, cost performance is still the main consideration for consumers, new energy leader BYD has strong pricing power below 200,000 yuan, the current BYD sales growth and share expansion demand is still strong, so in 2024, the price band below 200,000 yuan will be in the stage of intensified competition and pressure on profitability.
On the other hand, BYD launched a price offensive while still continuously improving the product matrix. On the day of the release of the financial report, BYD Dynasty Net's new car Yuan UP was officially launched, with a guide price of 96,800-119,800 yuan.
It is reported that the first A0-class pure electric SUV born of this model BYD e-platform 3.0. The new car has a maximum power of 130kW and a range of 401km CLTC under comprehensive working conditions, and is equipped with a 360° image function as standard.
Image source: Photo by Times Finance
According to BYD's plan, Yuan UP will focus on the A0-level market, explore the A00-level market, and form a partner with Yuan PLUS, so that Yuan IP can cover different circles of the pan-A-level market. At present, the price of the Yuan PLUS Glory Edition is 119,800-147,800 yuan.
BYD believes that with BYD's continuous efforts in various market segments, the annual performance is expected to continue to rise.
A series of price and product offensives enabled BYD to quickly reap orders. According to the first financial report, BYD said at the investor communication meeting on the 27th that the company launched "lower electricity than oil" at the beginning of the year through large-scale, cost-effective and technological advantages, which contributed to the watershed of fuel vehicles to weaken. The volume in March is expected to be 300,000 units, and the supply of terminals is currently in short supply. At present, the orders for Qin PLUS and Destroyer 05 far exceed the production capacity, and the supply of production capacity is being increased. Sales in 2024 will increase by at least 20% from a base in 2023.
According to this calculation, BYD's sales are expected to be at least 3.6 million units in 2024. Times Finance verified with BYD on this sales target, but did not receive a reply as of press time.
According to the first financial report, at the investor communication meeting, Wang Chuanfu also gave an analysis and judgment of the future automobile market, which believes that the share of joint ventures will be reduced by 10% from 40% in the next 3-5 years. This 30% share is the space for Chinese brands in the future.
The price war is vigorous, can BYD, the "first brother of new energy", continue to drive at high speed?