BYD (002594.SZ)reportedly is preparing to lay off employees at its auto sales unit after its sales have plunged this year amid heated market competition in China.
Numerous Chinese automakers reported slower vehicle sales after the central government ended purchase incentives earlier this year.
Some of the company's "new energy" models such as the F3DM plug-in hybrid and E6 electric crossover also have failed to generate much revenue due to limited sales.

SHENZHEN, China — BYD reportedly is preparing to lay off employees at its auto sales unit after its sales have plunged this year amid heated market competition in China.

The battery and car manufacturer, backed by U.S. billionaire Warren Buffett, plans to lay off up to 2,600 employees at the sales unit, according to a post from an unidentified laid off employee on the Chinese microblog site weibo.com.

Initially, about 1,000 employees will lose their jobs. Some sales teams have been dismissed, with staff members being transferred to assembly plants, and the job cuts may also affect other departments, the post said.

BYD this week admitted there is a personnel transfer underway, but described it as "normal activity" to improve service and enhance efficiency.

BYD was among Chinese automakers that reported slower vehicle sales after the central government ended purchase incentives earlier this year and General Motors and Volkswagen expanded their local presence with price-competitive entry-level models.

BYD's "new energy" models such as the F3DM plug-in hybrid and E6 electric crossover also have failed to generate much revenue due to limited sales.

"BYD has been quite aggressive on production expansion and employee hiring," said independent analyst Zhong Shi. "But the sales drop and profit slump have brought more pressure, so job cuts are inevitable."

Shenzhen-based BYD saw its profit fall 89 percent to $43 million in the first half of this year as the company's automotive business has declined. BYD car sales in the first six months slid 23 percent year-on-year to 220,131 units as demand waned for its mainstream compacts, the F3 sedan and F0 hatchback.

BYD Chairman Wang Chuanfu has said he is confident that second-half sales will pick up after the midsize G6 sedan is launched and production of S6 crossover vehicles is increased.

Inside Line says: Last year, BYD boosted sales by 15.5 percent to 520,000 units, missing a target of 600,000 units (and earlier projection of 800,000 units). The carmaker aims to sell 550,000-570,000 units this year.