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BYD boosts profit estimate as Chinese automakers resilient in slowdown

BEIJING/SHANGHAI (Reuters) - BYD Co, a Chinese automaker backed by Warren Buffett’s Berkshire Hathaway, raised its 2015 profit estimate to a five-year high, citing strong demand for its electric and plug-in hybrid vehicles.

A customer checks a BYD e6 electric car at a dealership in Beijing, China, December 9, 2015. REUTERS/Jason Lee

Despite a slowing economy and volatile financial markets, Chinese automakers such as BYD and Geely Automobile Holdings have flagged bumper profits for 2015, boosted by favorable government policies and consumer preferences that stoked demand for their products.

BYD, which primarily makes electric and hybrid vehicles, said late on Thursday it expects net profit attributable to shareholders to climb between 518 percent and 557 percent for 2015, compared with an earlier forecast of a rise in the range of 435 percent to 481 percent.

Shares in BYD traded up 7.2 percent in Shenzhen and 2.8 percent in Hong Kong by the close of the morning session after the announcement.

Separately, Geely said late on Wednesday its profit would rise 50 percent to 60 percent for 2015.

Government policies drove a quadrupling in demand for so-called “new energy vehicles” in China last year, while consumers snapped up sports utility vehicles (SUVs) and increasingly sought out more bang for their buck, trends that have helped Chinese automakers weather the slowest economic growth in 25 years.

Some Chinese car makers are predicting further sales growth in 2016. This week, Chongqing Changan Automobile said it expects sales this year to increase at least 6.2 percent to 2.95 million vehicles, while Geely said it aims for an 18 percent rise to 600,000 units. Great Wall Motor Co, which focuses on SUVs, said it’s targeting 11.4 percent sales growth.

BYD’s estimated net income of at least 2.3 billion yuan ($349.15 million) for 2015 would be its highest since 2010.

The automaker’s bet on Chinese consumers embracing electric and hybrid vehicles has started to pay off thanks to government subsidies, strict national fuel economy targets and big cities putting fewer limits on electric cars than traditional petrol powered vehicles.

Buffett’s company owns 9.1 percent of BYD.

The Chinese automaker said that even though it is producing electric and plug-in hybrid vehicles at full capacity, it cannot meet demand, adding that it had received “a mountain of orders” for its K9 electric buses and E6 cars.

Reporting by Jake Spring and Engen Tham; Editing by Edwina Gibbs and Muralikumar Anantharaman

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