Further Decrease in Governmental Subsidizes May Cause Drop in sales of BYD in China

Governmental subsidizes on purchase of alternative energy vehicles of BYD, one of leading automakers in China, may decrease by 50%.
Municipal government in Shanghai may cut down subsidizes on purchase of green vehicles launched by automakers of which sales have totaled 40,000 units or more since January 1, 2014. And decrease in governmental may be 50%; There may be not subsidize on purchase of green vehicles produced by those of which sales have been 60 thousand units or more. Moreover, governmental subsidizes on purchase of hybrid plug-in vehicles, of which sales have been less than 40 thousand units, may decrease to 10,000 RMB yuan from 30,000 RMB yuan.
Sales of BYD will be 40,000 units in a short time, which means price of its products may increase due to decrease in governmental subsidizes. Rise in price may cause loss of customers.
Price of Roewe e550, one of major competitors of Qin of BYD, is 176.800 RMB yuan while that of Qin is 179.800 RMB yuan. However, decrease in governmental subsidizes may lead to rise in price of Qin, making it more expensive than Roewe e550.
Decrease in governmental subsidizes has reportedly caused considerable drop in sales of BYD this year, making it lose market shares to SAIC.
Sales of Qin and Tang were 22,000 units in Shanghai in 2015; however, sales were only about 4,000 units in the first half year in 2016. Even sales in the whole Chinese market have suffered great drop. Yearly decrease of two modes was 42.9%.


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