Buffet-Backed BYD Prepares for Another Crack at the U.S. Auto Market
Japanese and Korean car manufacturers created a rather seismic shift in the American automotive scene when they introduced their vehicles many years ago, for better or for worse. And although China is currently the largest auto market in the world, its domestic manufacturers are also looking to bring their wares across the Pacific — and they are hoping to do so by next year.
Those who say that won’t happen will be betting against the Oracle of Omaha himself: Warren Buffett, who has sunk a rather sizable chunk of money into China’s BYD Co. on the assumption — a rather educated one, we would presume — that the company will begin shipping its cars to U.S. shores come 2015.
“Entering the U.S. market carries more symbolic meaning to brand building than actually boosting its bottom line,” Han Weiqi, an analyst with CSC International Holdings in Shanghai, told Bloomberg. “They really need to make sure cars they deliver there have sound quality in order to avoid adverse impact.”
This wouldn’t be BYD’s first attempt to enter the U.S. market, either. The company tried in 2010, and although the efforts didn’t pan out, it says that it’s more prepared now than it was then. However, Han told Bloomberg that BYD “has a track record of planning bigger than what they can actually deliver.”
But a rather successful three-year turnaround plan implemented at BYD by billionaire founder and Chairman Wang Chuanfu has cut the number of dealerships and narrowed the losses at its solar business, Bloomberg reports. A healthier standing with its Chinese business would make a move abroad more feasible, at least in theory.
BYD specializes in electric vehicles, a segment that has not yet caught on in China due to a lack of political support. Still, the growing demand for EVs in the United States presents a great opportunity for BYD, which arguably does do business in the States already, through its electric bus business which sees units sold exclusively to fleet operators.
Bloomberg reports that Stella Li, the senior vice president in charge of the company’s U.S. business, said the model most likely to come to the U.S. would be the BYD Qin, a hybrid that uses a 1.5-liter turbocharged internal combustion engine that is then paired to a 110kW electric motor. The result is a car that can manage an estimated 40 miles on electric power alone and return well over 100 miles per gallon.
Moreover, while it’s not a particularly exciting-looking car, it certainly doesn’t look bad. Chinese vehicles have, for the most part, established an unfortunate reputation as being quite bland, but the Qin (pronounced chin) and its Chinese calligraphy-inspired headlights actually looks the part. It’s also expected to start at around $31,000 before incentives, meaning if it does indeed reach American shores, the BYD could actually be quite a competitive vehicle.
It’s still unclear how a Chinese automotive brand would be accepted in the states in today’s current auto climate. The American car scene was vastly different when Toyota, Honda, and others made their entries, but times have changed.