BYD Automotive Massive Layoffs ReportedBy Scott Doggett August 31, 2011
Chinese battery and car maker BYD Co. is laying off a large number of workers, according to the weekly Chinese newspaper Economic Observer. Most are from the BYD Automobile sales company, and all will leave the company by the end of September, the newspaper reported. BYD employees told the newspaper that the company was firing workers, but estimates about the number of people being laid off varied. One BYD employee reportedly said that the BYD Automobile Sales Co. plans to reduce its staff from 2,600 to 800, laying off 1,000 employees in the first sweep. The company, in which Warren Buffett holds a stake, has been struggling to sell battery-electric and hybrid-electric vehicles in China, and efforts to export them to the U.S. have thus far proven unsuccessful.
Within hours of the newspaper's report, a BYD Co. official told Dow Jones Newswires that the company had no intention of reducing its sales staff, despite a sharp fall in car sales that led to a plunge in its first-half earnings. The company is 10 percent owned by a unit of Warren Buffett's Berkshire Hathaway Inc. However, the official said, without elaborating, that the company's sales department is undergoing a restructuring process. BYD announced last week that its net profit dived 88.6 percent in the first half due mainly to a 23.4 percent drop in car sales to 220,131 units. The company said it expects sales to remain slow in the second half amid weak consumer confidence.
In March, Reuters published a lengthy special report that raised a number of questions about the troubled automaker. Based on interviews with industry consultants and executives as well as diplomatic cables revealed by WikiLeaks and provided to Reuters by a third party, the report described a record of BYD stealing designs from rivals, using those savings to undercut competitors on price and scrimping on safety. According to the U.S consulate in Guangzhou, China, BYD sold some vehicles almost at cost to boost its market share and may have advertised safety ratings it did not earn on one model, Reuters reported. The scorching assessment of BYD by U.S. officials carried the title, "BYD seeks to 'Build Your Dreams' -- based on Someone Else's Designs."