• This marks BYD's first year-on-year decline in net income since the first quarter of 2022.
• The second-quarter gross margin stood at 16.27 percent, down 1.15 percentage points from the same period last year and down 3.8 percentage points from the first quarter.

BYD (HKG: 1211, OTCMKTS: BYDDY) experienced a rare sharp drop in quarterly net income as competition in China's new energy vehicle (NEV) market grew increasingly fierce.

The company saw a net income of RMB 6.36 billion ($892 million) in the second quarter, a 29.87 percent year-on-year decline and the first drop since the first quarter of 2022, according to its semi-annual results released today.

This represents a 30.58 percent decrease from the first quarter's RMB 9.16 billion, marking the second consecutive quarter of sequential decline.

BYD's second-quarter revenue totaled RMB 201.0 billion, up 14.04 percent year-on-year and up 17.94 percent quarter-on-quarter.

The gross margin for the second quarter stood at 16.27 percent, down 1.15 percentage points year-on-year and down 3.8 percentage points quarter-on-quarter.

BYD's new energy vehicle (NEV) sales came in at 1,145,150 units in the second quarter, up 16.06 percent year-on-year and up 14.42 percent quarter-on-quarter.

The continued revenue growth coupled with a sharp net income decline reflects pressures from intense market competition.

The company rolled out Smart Driving Edition updates for over 20 models in February, aiming to boost sales without lowering prices.

However, this appears to have fallen short of expectations. Late last month, BYD introduced lower-priced variants of its Yuan Up compact SUV without smart driving capabilities, signaling a strategic shift.

Meanwhile, one of its main competitors, Geely, is gaining ground by adopting strategies BYD employed in previous years.

Over recent months, Geely has launched multiple new models, particularly under its Geely Galaxy sub-brand, offering strong specifications at competitive prices.

For BYD, overseas operations stand out as a bright spot this year.

The company's overseas NEV sales reached 258,182 units in the second quarter, surging 144.71 percent year-on-year and growing 25.28 percent quarter-on-quarter.

In the first half of this year, BYD's revenue reached RMB 371.3 billion, a 23.30 percent year-on-year increase and a record high.

Net income for the first half was RMB 15.51 billion, up 13.79 percent year-on-year.

The gross margin for the first half was 18.01 percent, down slightly from 18.78 percent in the same period last year, primarily due to the impact of price wars.

($1 = RMB 7.1330)