Chinese automaker BYD, backed by U.S. billionaire Warren Buffett, continues to tumble down a rocky road.
On Wednesday, Shanghai Daily reported that BYD is expected to lay off up to 70 percent of its workforce after a decline in sales led to a net profit of only 266.74 million yuan ($41.2 million U.S. at the current exchange rate) in the first quarter of 2011. Shanghai Daily claims BYD will cut its numbers of sales-unit employees from 2,600 down to 800 by year's end and says that some of BYD's sales staff have already been dismissed. Job cuts are soon expected to reach other BYD departments.
Independent automotive analyst Zhong Shi says:
BYD's sales reportedly dropped off after the Chinese government ended purchase incentives. The Chinese automaker endured even more pain when General Motors and Volkswagen rolled in with price-competitive, entry-level vehicles. Will BYD rebound from its struggles? Or is the automaker that urges you to build your dreams running out of time?BYD had been quite aggressive in expanding production and hiring employees. But the drop in sales and profit slump have triggered higher pressure on cost and so job cuts are inevitable.