Up to 20,000 yuan! The trade-in policy has landed, and BYD Dynasty and Ocean have "reduced prices"

Southern Metropolis Daily

2024-05-06 16:19Published on the official account of Guangdong Southern Metropolis Daily

During the May Day holiday, BYD (002594) once again released a "price war" move. For the models of Dynasty Network and Ocean Network, BYD has launched a new car purchase policy. Among them, the maximum bicycle replacement subsidy of Dynasty Network is 18,000 yuan, and the maximum bicycle replacement subsidy of Ocean Network is 20,000 yuan.

It is understood that the replacement subsidy policy is mainly aimed at consumers who exchange old cars for new cars on Dynasty Network and Ocean Network. As long as consumers replace eligible old cars with new cars from BYD Dynasty and Ocean Net, they can enjoy the benefits brought by this policy.

Some industry people said that the purpose of BYD's replacement policy is to "reduce prices" in disguise. BYD told the reporter of Nandu Bay Finance Society, "This policy is not a price reduction, but a replacement subsidy for car purchases." For details, please refer to the public release information. ”

The "trade-in" policy was implemented, and BYD opened the second "price reduction" in the year

The bicycle replacement subsidy launched by BYD Dynasty Network and Ocean Network is divided into two parts. In addition to the state subsidy of up to 10,000 yuan, the BYD subsidy for Dynasty Net models is up to 8,000 yuan, and the subsidy for BYD Ocean Net models is up to 10,000 yuan.

In addition, BYD Dynasty Network and Ocean Network have also launched corresponding financial policies simultaneously: minimum 0 down payment, 12-60 arbitrary loan period, 40% down payment from 24 installments with 0 interest, down payment of 50% and final payment of 50%, 1 year 0 interest and 0 monthly payment. Users can choose one of three financial solutions at the same time: 0 down payment, 0 interest and 0 monthly payment.

This old car replacement subsidy is the second time BYD has "cut prices" this year. After the beginning of this year, BYD fired the "first shot" of the price war in the new energy vehicle market, and quickly completed the layout of the "Glory Edition" model in each price segment of the ocean network and the dynasty network, with a "price reduction" ranging from 10,000 to 50,000 yuan to ensure the basic sales volume. Driven by a number of Glory Edition models, BYD has exceeded 300,000 units for two consecutive months.

In the context of the increasingly fierce price war, BYD's gross profit and gross profit margin have increased instead of falling. According to the calculations of a number of institutions, in the first quarter of this year, after excluding BYD electronics, the average selling price of BYD bicycles was 142,000 yuan, down 17.2% year-on-year and 6.1% month-on-month, and the gross profit of bicycles was 39,800 yuan, up 12.1% year-on-year and 5.1% month-on-month, and the gross profit margin was 21.9%, up 4% year-on-year.

The background of BYD's subsidy policy is that on April 26, the Ministry of Commerce, the Ministry of Finance and other seven ministries and commissions jointly issued the "Implementation Rules for Car Trade-in Subsidy", which will give a one-time replacement subsidy of 10,000 yuan to users who scrap fuel or new energy passenger vehicles and purchase new energy passenger cars.

The reporter of Nandu Bay Finance Society noticed that after the announcement of the implementation rules, Changan Automobile, Guangzhou Automobile Group, Xiaopeng Motors, Dongfeng Nissan, FAW Toyota, FAW-Volkswagen and other car companies responded and launched the "old for new" policy.

A number of institutions expect BYD to be one of the beneficiaries of the policy

In the past April, BYD's new energy passenger car sales exceeded 300,000 again, reaching 313,200 units, which was the second highest sales result after December last year, a year-on-year increase of 49%, and this year's cumulative sales of 939,500 units, a year-on-year increase of 23%.

It is not easy for BYD to achieve sales of more than 300,000 in April. The Federation of Passenger Cars believes that the auto market did not rebound significantly at the end of March, and the market heat during the Qingming holiday was not as hot as the regular weekend, and the overall auto market continued to wait and see at the end of March, and the release of terminal demand was blocked. The price and preferential policies of various enterprises have been adjusted frequently, but the actual effect is relatively limited, and until the middle of the month, the terminal sentiment in April has not recovered to the level of the same period in March.

According to the analysis of the Passenger Association, with the imminent launch of the national "trade-in" detailed policy, the two departments jointly issued the "Notice on Adjusting the Relevant Policies of Auto Loans" before the Qingming Festival, and increased the operation guidance for optimizing the circulation of new cars and trade-ins in the field of auto finance, reflecting the current overall consideration and detailed grasp of "promoting consumption and boosting domestic demand", and the consumption potential of the market "elimination and renewal" and "replacement update" will be gradually released, which is conducive to the gradual strengthening of the auto market in the next few months.

In terms of performance, on the evening of April 29, BYD disclosed its first quarter report for 2024. During the reporting period, the company achieved operating income of 124.944 billion yuan, a year-on-year increase of 3.97%, and net profit attributable to the parent company of 4.569 billion yuan, a year-on-year increase of 10.62%. Gross margin was 21.9%, up 4% year-on-year.

With the growth of sales and performance, superimposed on the repair of the auto sector, BYD's share price also ushered in a rebound. As of the close of trading on May 6, BYD's share price closed at 226.30 yuan per share, up more than 35% from the low point of the stock price on February 5, and the latest market value was 658.79 billion yuan.

It is reported that BYD's full-year sales target for 2024 is to maintain an increase of more than 20% on the basis of last year's sales, that is, 3.6 million units. Many institutions are optimistic about the role of the "trade-in" policy on BYD's sales. China Securities Construction Investment believes that BYD will be one of the beneficiaries of the trade-in policy, and the company's products are in line with the preference direction of incremental demand driven by the policy, and the policy is expected to bring 24.5% sales elasticity through calculation.

Guojin Securities said that under the price war, BYD's operation was strong, and the gross profit level exceeded expectations. The "trade-in" policy is conducive to compact tram sales, and the company has the leading power and pricing power in this market, with obvious channel and cost advantages, and the company's sales in 2024 may exceed expectations under the policy catalyst.

Warren Buffett talks about investing in BYD: Munger and I slapped the table and asked me to "buy, buy, buy"

At Berkshire Hathaway's shareholder meeting on May 4, Warren Buffett, who is 93 years old, recalled what it was like when he invested in BYD.

Warren Buffett recalled, "When making investment decisions, Munger used to follow my wishes and agree with my proposals, but only twice did he slap the table with me and ask me to 'buy, buy, buy', once to take a stake in BYD, and the other time to take a stake in Costco." ”

However, Buffett believes that Munger was right when it came to investing in both companies.

"BYD's investment is similar to the investment we made in Japan five years ago: we quickly invested in five trading companies in Japan, and you rarely see us making such investments outside of the United States. Warren Buffett said.

It is worth noting that Warren Buffett's Berkshire Hathaway has continuously reduced its holdings of BYD H shares in recent years. Since the first reduction in August 2022, Berkshire Hathaway has reduced its holdings of BYD H shares by about 105 million shares, and its holdings have been reduced by nearly 50%, and its shareholding ratio has dropped to 10.90%.

Warren Buffett previously talked about reducing his holdings of BYD, saying that during the sale of BYD shares, BYD's sales performance was outstanding. Selling BYD shares will help with better capital allocation, and BYD is a "company par excellence".

Written by: Nandu Bay Finance Society reporter Qiu Moshan

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