BYD has announced a larger-than-expected drop in profits and, for the first time, a workforce reduction due to weak sales in the domestic market. The Chinese giant’s net profit fell by 19% to 32,6 billion yuan (4,72 billion dollars), marking the first annual decline in four years and a worse performance compared to the average 12,1% decline estimated by analysts. In the fourth quarter, Reuters reports, profit plummeted by 38,2% to 9,3 billion yuan compared to the previous year, the third consecutive quarter of contraction, while revenue grew by only 3,5%, the weakest pace in the last six years.
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BYD profit declining
The gross margin for cars and related products, which make up over 80% of operating revenue, fell to 20,5%, a decrease of 1,8 percentage points. The slowdown reflects structural pressures: domestic demand has weakened and competition has become more intense, with rivals like Leapmotor and Geely who have eroded BYD’s technological advantage. The company dropped from first place in 2025 to fourth in sales in the first two months of the year, effectively suffering the sharpest decline since the start of the pandemic. The company has reduced its workforce by 10,2%, reaching 869.622 employees, and also faces the loss of the tax benefit on the purchase of new energy vehicles and the revision of subsidies.
Workforce reduction
Looking ahead, analysts predict a more difficult 2026 for BYD’s profits, with margins under pressure and the need to focus on economies of scale, cost control, and international growth. In this sense, the Chinese tech company is pushing for overseas expansion, where sales and profitability have grown, and has launched new models with fast-charging batteries and investments in the charging network. But the question remains whether the more expensive range will be able to offset the loss of volumes in the low-end segment. At the same time, the company must manage greater liquidity difficulties and a negative working capital of -97 billion yuan.
