BYD's profit drops for first time in four years as price war hurts margins

BEIJING, March 27 (Reuters): BYD, China's biggest electric automaker by sales, on Friday posted a bigger-than-expected profit drop and disclosed a headcount fall for the first time, hurt by weak sales in its home market.
Net profit fell 19% to 32.6 billion yuan ($4.72 billion), BYD said in a stock exchange filing, its first annual profit drop in four years and steeper than an average 12.1% fall expected by analysts polled by LSEG.
BYD could face a tougher earnings backdrop in 2026, as intense competition and softer domestic demand are likely to keep pressure on profit, even as overseas growth continues, analysts said.
The automaker was once propelled by its affordable Dynasty and Ocean series, but has been losing ground as rivals such as Leapmotor and Geely narrow its technological lead.
It was China's biggest automaker in 2025 but fell to fourth place over the January to February period as its overall sales dropped by the most since the COVID-19 pandemic.
Revenue grew 3.5%, its weakest pace in six years, and the automaker cut its workforce by 10.2% to 869,622 as of 2025 end.
For the three months through December, profit slumped 38.2% to 9.3 billion yuan from a year ago, its third straight quarter of decline.
Gross profit margin from autos and related products, which contributed 80.7% to operating revenue, slipped to 20.5% last year, down 1.8 percentage points from a year ago.
The drop in profit, after years of rapid growth, raises doubts about BYD's earnings visibility, underscoring a more cautious view on the EV sector in the world's largest auto market.
"We also recognise that competition in the (new energy vehicle) industry has reached a fever pitch, and is undergoing a brutal 'knockout stage'," BYD chairman Wang Chuanfu said, while reaffirming its overseas push.
BYD makes only all-electric and plug-in petrol-electric hybrid vehicles, so has suffered the most from the expiration of purchase tax exemption on new energy vehicles.