Chinese carmakers BYD Co. Ltd. (OTC:BYDDY) (OTC:BYDDF) and Chery Automobile are accelerating overseas sales as they seek higher profits outside a slowing home market and benefit from rising global demand for electric vehicles.
Chery Overseas Sales Outpace Home Market
Chery, China's largest vehicle exporter and an early leader in the country's go-global auto push, delivered three times as many vehicles overseas as at home last month, the South China Morning Post reported on Thursday.
The state-owned carmaker, based in eastern China's Anhui province, delivered 181,571 vehicles outside mainland China in May, up 81% from a year earlier. Overseas sales accounted for 73% of its monthly total.
BYD, the world's largest EV builder, also reported an 81% year-over-year jump in overseas sales in May. Its 160,177 overseas units represented 42% of total sales.
Chinese Automakers Chase Bigger Global Margins
"The numbers are eye-catching because they show how Chery is evolving into a truly international player with overseas sales making up a majority of its total," said Phate Zhang, founder of Shanghai-based data provider CnEVPost.
Zhang said Chery is not alone, with BYD and Great Wall Motors (OTCPK:GWLLF) also expanding abroad by leveraging technological and manufacturing advantages.
The overseas push has become more important this year as Chinese automakers face weaker domestic demand after reduced government-funded buyer incentives.
Nick Lai, head of Asia-Pacific auto research at JPMorgan, told SCMP that Chinese automakers' average net profit margin is about 5,000 yuan, or roughly $739, per vehicle, a figure that he believes could climb fourfold to 20,000 yuan ($2,952) in overseas markets.
EV Demand Gives Exporters Fresh Opening
A global energy shock linked to the U.S.-Israel conflict with Iran has also lifted interest in EVs, giving BYD, Chery and rivals another opening. From January to May, Chery's overseas deliveries rose nearly 70% to 752,755 vehicles. EVs, including battery-electric and plug-in hybrid models, made up 361,800 of those units, or 48%.
According to data from Dataforce analysts in May, Chinese EV brands have captured more than 15% of Europe's electric car sales. In the United Kingdom, nearly one in seven vehicle purchases now comes from a Chinese automaker. Brazil has also become a major growth market for Chinese EVs.
Benzinga’s Edge Rankings place BYD stock in the 90th percentile for Growth, but an unfavorable performance metric over the Short, Medium, and Long range.
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