BYD Gross Profit Margin, Vehicle Margin, And Profit Per Car

New energy vehicles. Pexels Image.

This article presents several statistics about BYD’s profit and profit margin. First, we will look at BYD’s consolidated profit and profit margin.

Next, we will examine the profit and profit margin of BYD’s automotive segment. In this regard, we will look into BYD’s automotive gross profit and the respective vehicle margin. Lastly, we will explore BYD’s profit per car.

Let’s get down to business!

Investors looking for the statistics of BYD’s revenue and sales may find valuable insights on these pages: BYD revenue by region, BYD ev and hybrid vehicle sales, and BYD commercial vehicle sales.

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Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Profit Per Car: Profit per car for an automobile company refers to the amount of profit a company earns from selling a single vehicle. This metric helps to understand how efficiently a company can turn the sale of a car into profit, taking into account various costs associated with manufacturing, marketing, and selling the vehicle.

Key Components:

1. Revenue per Car: The selling price of the car.

2. Cost of Goods Sold (COGS): This includes all direct costs involved in manufacturing the car, such as materials, labor, and production overhead.

Calculation:

To calculate the profit per car:

Profit Per Car = Selling Price − COGS

This metric is crucial for an automobile company to assess their profitability and make strategic decisions regarding pricing, cost management, and production efficiency.

Vehicle Margin: Vehicle margin for an automobile company refers to the profit margin specifically associated with the sale of vehicles. It is a key financial metric indicating the profitability of vehicle sales, excluding other business segments such as financing, aftermarket services, or parts sales.

Key Components:

1. Revenue per Vehicle: The average selling price of vehicles.

2. Cost of Goods Sold (COGS): This includes all direct costs involved in manufacturing the vehicles, such as materials, labor, and production overhead.

Calculation:

To calculate the vehicle margin, you use the following formula:

\[ Vehicle\ Margin = \frac{Revenue\ Per\ Vehicle\ -\ COGS}{Revenuer\ Per\ Vehicle} \times 100\% \]

This metric helps an automobile company to assess their profitability from vehicle sales and make strategic decisions regarding pricing, cost management, and production efficiency.

Renminbi (RMB): Renminbi or RMB is the official currency of the People’s Republic of China. The primary unit of the renminbi is the yuan (CNY). The symbol for the Chinese Yuan Renminbi (CNY) is ¥.

BYD Company uses the Renminbi (RMB) for its financial transactions and reporting. The current exchange rate for the Chinese Yuan Renminbi (CNY) to the US Dollar (USD) is approximately 7.24 CNY for 1 USD.

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Gross Profit And Operating Profit

BYD-consolidated-profit

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BYD uses the Renminbi (RMB), also known as the Yuan (CNY), for its financial transactions and reporting. The exchange rate of the RMB to USD is available here: Renminbi (RMB).

BYD generated RMB 121.8 billion (US$ 17 billion) in gross profit in fiscal year 2023, approximately 69% higher than the previous year. In fiscal year 2022, BYD’s gross profit was RMB 72.2 billion (US$ 10 billion), compared to RMB 28.1 billion (US$ 4 billion) in the previous year.

Since fiscal year 2019, BYD’s gross profit has increased by nearly 500%, rising from just RMB 21 billion to over RMB 121 billion in four years.

BYD’s operating profit reached RMB 38.1 billion (US$ 5 billion) in fiscal year 2023, up 77% from the previous year. In fiscal year 2022, BYD produced an operating profit of RMB 21.5 billion (US$ 3 billion), compared to just RMB 4.6 billion (US$ 630 million) in 2021.

In fiscal year 2019, BYD’s operating profit was only RMB 2.3 billion (US$ 320 million). Over four years, it has increased nearly 16-fold, reaching a record figure of RMB 38 billion in fiscal year 2023.

BYD’s significant profit growth can be attributed to several factors, with a notable one being its aggressive expansion in electric vehicle (EV) sales. In this regard, BYD has seen a significant surge in EV sales in recent years, driven by strong market demand and government incentives for greener vehicles. This has contributed to the remarkable profit growth.

Apart from its strategic expansion, BYD has also adopted a competitive pricing strategy. By aggressively cutting prices to gain market share, BYD has increased overall sales volumes, which, despite lower profit margins per car, has significantly boosted profitability.

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Gross Margin And Operating Profit Margin

BYD-consolidated-profit-margin

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BYD uses the Renminbi (RMB), also known as the Yuan (CNY), for its financial transactions and reporting. The exchange rate of the RMB to USD is available here: Renminbi (RMB).

BYD’s gross margin reached a record figure of 20% in fiscal year 2023, up modestly from 17% in fiscal year 2022. Meanwhile, BYD’s operating profit margin was 6.3% in fiscal year 2023, compared to 5.1% in the previous year.

BYD’s gross margin has averaged 17% since fiscal year 2021, while the operating margin has averaged 4.5% during the same period. A significant trend in BYD’s performance is the considerable rise in its operating margin over the past five years. From 1.8% in fiscal year 2019, it soared to 6.3% in fiscal year 2023.

On the other hand, BYD’s gross profit margin has remained relatively stable over the last five yers, demonstrating the automaker’s resilient performance in the automotive sector.

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Growth Rates Of Gross Profit And Operating Profit

BYD-growth-of-consolidated-profit

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BYD uses the Renminbi (RMB), also known as the Yuan (CNY), for its financial transactions and reporting. The exchange rate of the RMB to USD is available here: Renminbi (RMB).

BYD’s gross and operating profits have both experienced significant growth, as shown in the graph above. The growth in operating profit, however, has outperformed the growth in gross profit.

On average, BYD’s gross profit has grown by 73% annually since fiscal year 2021. Meanwhile, the average annual growth rate of operating profit was nearly double that of the gross profit, reaching 136% annually since fiscal year 2021.

In fiscal year 2023, BYD’s gross profit grew by 69%, while operating profit increased by 77%.

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Automotive Gross Profit

BYD-automotive-gross-profit

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BYD uses the Renminbi (RMB), also known as the Yuan (CNY), for its financial transactions and reporting. The exchange rate of the RMB to USD is available here: Renminbi (RMB).

For your information, BYD does not break down its gross profit by segment. However, we can estimate the gross profit for the automotive segment.

According to this article, BYD’s revenue breakdown by segment, BYD’s automotive sector has contributed an average of 67% of total revenue over the last three years. Therefore, we can assume that the profit contribution from the automotive segment could be proportional to its revenue contribution.

Assuming BYD’s automotive segment has contributed an average of 60% of the total gross profit over the last three years, the gross profit of BYD’s automotive segment may have reached RMB 17 billion (US$ 2.3 billion), RMB 43.3 billion (US$ 6 billion), and RMB 73.1 billion (US$ 10 billion) in fiscal year 2021, 2022, and 2023, respectively, as illustrated in the graph above.

With the estimated numbers, BYD’s automotive gross profit has increased by more than 300% since fiscal year 2021, reaching a record figure of over RMB 73 billion in fiscal year 2023.

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Vehicle Margin

BYD-vehicle-margin

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BYD uses the Renminbi (RMB), also known as the Yuan (CNY), for its financial transactions and reporting. The exchange rate of the RMB to USD is available here: Renminbi (RMB).

The vehicle margin presented in the chart above is evaluated based on BYD’s gross profit margin. You can find the formula for calculating BYD’s vehicle margin here: vehicle margin.

That said, BYD’s vehicle margins are estimated at 13.1%, 13.4%, and 15.1% in fiscal year 2021, 2022, and 2023, respectively, based on the assumed automotive gross profits calculated in previous discussions.

My opinion is that the estimated BYD’s vehicle margins are quite reasonable since the consolidated gross margin was 13%, 17%, and 20%, respectively, during the same period. The trend indicates that the automotive segment is performing in line with the overall company trends.

In addition, BYD’s estimated vehicle margins are much higher than General Motors and Ford Motors’ vehicle margins of 10%, as presented in these articles: GM vs Tesla in vehicle margin and Ford Vs GM in vehicle margin. However, BYD’s estimated vehicle margins are slightly lower than Tesla’s vehicle margin of around 17%.

In conclusion, while BYD’s profit margin per car matches GM and Ford, it doesn’t quite reach the level of Tesla. Nevertheless, this trend demonstrates BYD’s competitive position in the global automotive industry.

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Profit Per Car

BYD-profit-per-car

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BYD uses the Renminbi (RMB), also known as the Yuan (CNY), for its financial transactions and reporting. The exchange rate of the RMB to USD is available here: Renminbi (RMB).

The profit per car presented in the chart above is evaluated based on BYD’s gross profit per vehicle. You can find the formula for calculating BYD’s profit per vehicle here: profit per car.

To calculate BYD’s profit per car, we’ll need the total number of cars sold by BYD in the given fiscal year. Once we have that number, we can divide the estimated automotive gross profit by the total number of cars sold. With the estimated automotive gross profit available in previous discussions, we can go ahead to calculate BYD’s profit per car.

According to this article, BYD’s global car sales, BYD delivered 740 thousand, 1.9 million, and over 3 million vehicles in fiscal year 2021, 2022, and 2023, respectively.

Therefore, BYD’s profit per car was estimated to reach RMB 22,816 (US$ 3,143) in fiscal year 2021, RMB 22,535 (US$ 3,104) in fiscal year 2022, and RMB 24,155 (US$ 3,328) in fiscal year 2023. These figures reflect BYD’s ability to maintain profitability and even increase its profit per vehicle despite market fluctuations.

For perspective, the estimated profit per car for BYD is roughly in line with that of General Motors and Ford Motors, as discussed in these articles: GM vs Tesla in vehicle profit and Ford Vs GM in vehicle profit.

However, BYD’s profit per car is significantly lower than that of Tesla, as outlined in the articles mentioned above. In this context, BYD’s profit per car is only about half of Tesla’s profit per vehicle, which was $7,700 for fiscal year 2023.

In short, BYD’s profit per car is comparable to that of GM and Ford, but lower than Tesla’s.

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Conclusion

In conclusion, BYD’s profit per car of around RMB 24,000 or US$ 3,300 highlights the automaker’s focus on gaining market share through competitive pricing rather than maximizing profit per vehicle.

Besides, BYD’s vehicle margin of around 15% reflect the company’s efficiency in managing production costs and overall operations.

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References and Credits

1. All financial figures presented in this article were obtained and referenced from BYD’s annual reports published in the Investors Relation Page: BYD Investors Relation.

2. Pexels Images.

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Disclosure

References and examples such as tables, charts, and diagrams are constantly reviewed to avoid errors, but we cannot warrant the total correctness of all content.

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