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China Automaker BYD Aims To Overtake Toyota

Thu, 09/17/2009 - 8:05am
Elaine Kurtenbach, AP Business Writer

SHANGHAI (AP) -- Fast-growing Chinese battery and automaker BYD Co. is thinking big -- really big. It aims to overtake Toyota Motor Co. to become the global auto leader in under two decades, company officials say.

"It's our company's long-term target, to be China's No. 1 automaker by 2015 and to be the world's leading car maker by 2025," Jasmine Huang, a senior marketing representative for BYD, said in a phone interview Thursday.

"So far, our sales come mainly from domestic demand, but we are also thinking of expanding to overseas markets," Huang said, confirming similar comments by another BYD executive, deputy general manager Wang Jianjun, to the state-run newspaper China Daily.

Like other up-and-coming Chinese automakers, BYD has set its sights on breaking into major markets such as the U.S. and Europe. Although it started out building conventional cars, late last year it became the first automaker to launch mass production of a plug-in hybrid electric vehicle, that can be charged off a standard home outlet.

Whether BYD will succeed in meeting stringent U.S. and European standards for safety and quality, as well as customer expectations for comfort and performance, remains to be seen.

Chinese automakers remain reliant on mostly foreign technology and design and are still nowhere close to meeting finicky Western and Japanese standards, but they are catching up, analysts say. China's auto industry earlier this year overtook the U.S. in market size.

BYD's goal of becoming the global auto leader is realistic because explosive growth in Asia, its primary market, will continue, said Aaron Bragman, an auto industry analyst with the consulting firm IHS Global Insight in Ann Arbor, Mich..

But reaching that goal could come at GM's expense, although there likely will be so much sales growth that most automakers will see sales gains, Bragman said. GM is the sales leader in China.

But BYD, he said, won't be satisfied with growing only in Asia. It could also look at breaking into U.S. and European car markets. Making that leap, though, will require standout products, perhaps powered by its battery technology.

BYD would have to enter the U.S. through small and midsize car markets, and that could potentially hurt Honda and Toyota, which are strong in those segments, Bragman said. In midsize cars, Toyota and Honda have the two top U.S. sellers with the Toyota Camry and Honda Accord.

BYD might initially launch exports of a limited number of vehicles, just for the sake of its marketing and branding, says Scott Laprise, an industry analyst at CLSA.

"It's all about advertising and brand building," Laprise said. "That's going to be massive publicity. Don't sell anyone cars. Just let the world know you are the world leaders and then see what happens."

BYD was founded in 1995 and only branched into automaking in recent years. But it has won backing from billionaire investor Warren Buffett, whose MidAmerican Energy Holdings Co., the utility division of his Omaha, Neb.-based flagship Berkshire Hathaway, has a 9.9 percent stake in the Hong Kong-traded company.

BYD, which stands for Build Your Dreams, recently announced it has approval to get its shares listed in the southern city of Shenzhen, where the company is based.

In Jan.-August it sold 246,881 cars, just ahead of rival domestic automaker Chery Automobile Co, which reported sales totaling 240,275 units, according to the China Association of Automobile Manufacturers. Its most popular car, the F3 sedan has been China's top selling model for three months so far this year.

But General Motors Corp. led sales in China in the first half of the year at 814,442 units, followed by Volkswagen AG, with 652,436 vehicles sold.

Toyota, which displaced GM as the world's biggest automaker in 2008, sold nearly 9 million cars and trucks in 2008, while GM sold 8.4 million.

BYD expects to sell 400,000 cars this year and to manage annual sales exceeding 10 million by 2025, Wang, the deputy general manager, told the China Daily.

Company chairman Wang Chuanfu has said he plans to begin selling an all-electric vehicle in the United States by next year.

AP Auto Writer Tom Krisher in Detroit contributed to this report.

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