BYD will launch a personalized brand this year which currently has the internal code name of “F”. The operation of this new brand will be independent from BYD’s own system while the brand’s first product will be an off-road vehicle to compete with the Mercedes-Benz G-Class, according to local media outlet 36Kr on February 28.
Aiming to be a rival of luxury car brands such as Mercedes-Benz, Audi and BMW, the new brand will launch sports cars, off-road vehicles, coupes and others. Of BYD’s product offerings, the new brand’s prices will fall between that of Denza and Yangwang.
As early as last November, at the off-line event of BYD’s 3 millionth new energy vehicle, Wang Chuanfu, chairman and president of BYD, revealed that the company will launch a personalized brand in 2023.
With the launch of the new brand, BYD’s product matrix has become more diverse. The company’s Dynasty and Ocean series host vehicles priced below 300,000 yuan ($43,206). Meanwhile, Denza targets the price range between 300,000 yuan and 500,000 yuan, and the new brand is priced between 500,000 yuan to 800,000 yuan. Finally, Yangwang will produce vehicles priced over 800,000 yuan.
Previously, BYD has been caught in the dilemma of “high revenue and low profit”. In 2021, BYD’s revenue was 216.142 billion yuan, a year-on-year increase of 38.02%, while its gross profit was 23.633 billion yuan, down 13.25% year-on-year. Its gross profit margin even decreased from 17.75% to 11.18%.
In 2022, BYD’s profitability was boosted by several sub-brands. In the third quarter of 2022, the company’s net profit earned from selling one vehicle reached the highest level in history, reaching as high as 9,900 yuan. Given this gap, the company is constantly optimizing its sales structure. In the fourth quarter of 2022, the total sales volume of BYD’s Han series, Seal and other high-end models accounted for 28.73% of the total sales, up 6.09 percentage points from the previous month.
Essence Securities said that high-end models, such as BYD Sealion, Denza N7, Yangwang U8 and Yangwang U9, are expected to be released in sequence throughout in 2023 and are expected to bring in higher profitability.
Charlie Munger, an American billionaire investor and the vice chairman of Berkshire Hathaway, recently praised BYD, his investment target, when attending the Daily Journal’s virtual annual meeting. Munger, 99, said that his investment in BYD was the most successful of his career, adding that Tesla pales in comparison to BYD in China.
“BYD last year made more than $2 billion after taxes in the auto business in China. It’s incredible what’s happened,” Munger said. “If you count all the manufacturing space they have in China to make cars, it would amount to a big percentage of the Manhattan island, and nobody had ever heard of them a few years ago.”