BYD's Older Models Are Getting Cheaper — and That Is Eating Into the Bottom Line

BYD's third-quarter profit rose sharply, but the headline number hides a more awkward truth: the Chinese automaker is leaning on dealer discounts for ageing model generations to keep metal moving, and those markdowns are dragging average selling prices below what analysts had pencilled in.

For the three months to the end of September 2026, BYD reported a net profit attributable to shareholders of RMB 10.02 billion. That was up 28.08% year on year — a solid advance on paper, yet short of every broker estimate in the range compiled by Reuters, which ran from RMB 11.4 billion to RMB 12.95 billion. The result missed even the bottom of that band.

The revenue line told a similar story. Goldman Sachs said the quarterly turnover came in 9% below its own forecast and 8% under consensus, with higher dealer rebates on older models cited as the main culprit. In the bank's assessment, the discounts pulled average selling prices down and fed through to revenue, gross profit, operating profit and net profit alike.

Two Signals, One Quarter

What makes the quarter hard to read is that the operational miss and the investment verdict point in opposite directions. Goldman Sachs reaffirmed both its buy rating and its HKD 134 price target on the Hong Kong-listed H shares, declining to downgrade on the back of the revenue shortfall.

JPMorgan had already moved the other way. On Tuesday — before the results landed — it cut its rating on the mainland A shares from "Neutral" to "Underweight" and slashed its target to RMB 65 from RMB 88, while lowering its objective for the Hong Kong line to HK$60.

So the two most recent analyst actions do not add up to a single message. One house looked past the miss and kept its recommendation intact; the other had turned more cautious days ahead of the print.

There is an important limit to the Goldman argument. Its note pointed specifically to heavier rebates on older-generation vehicles. Nothing in that observation supports a claim about pricing across the entire range, and it says nothing about how the newly launched models will be priced.

Volume Slips at Home

The pricing pressure sits alongside a softer domestic market. Reuters reported on Friday that BYD's Chinese quarterly sales fell by roughly 12% as competition intensified — a decline that sharpens the gap between what the company earned and what the market had expected.

That combination frames the challenge for investors: BYD has to defend share in its home market against tougher rivals while keeping the profitability of each sale in view. Growing the top line is no longer enough on its own; the price at which that growth is achieved matters just as much.

Fresh Metal in the Showroom

BYD is not standing still on product. On Tuesday it launched the third-generation Qin Plus DM-i in China, a revised plug-in hybrid that media reports say offers up to 220 kilometres of electric range.

Three days later, the company published official images and specifications for the third-generation Tang, a five-seat SUV positioned as a flagship, with a market launch slated for the fourth quarter of 2026.

The two rollouts widen the line-up, but they also set up the next test. What matters now is whether the new arrivals can shore up domestic volume without a fresh round of discounting denting earnings more than analysts anticipate.