Cars

BYD declines on accusation of illegal land use

(Agencies)
Updated: 2010-07-16 16:22

BYD Co, the Chinese automaker backed by billionaire Warren Buffett, fell to its lowest in more than ten months after the nation's government said it will ask local authorities to investigate alleged illegal land usage in Shaanxi province.

The stock fell by as much as 5.7 percent to HK$51.05 in Hong Kong trading, and changed hands at HK$51.15 at 2:36 pm local time. The stock has lost 26 percent so far this year, compared with a 7.5 percent decline in the Hang Seng Index.

Related readings:  BYD may delay A-share listing to seek 'better timing'  BYD Co's June vehicle sales drop 21%  Foxconn urges HK judge to throw out suit filed by BYD  BYD, Changan approved for energy-efficiency subsidies

The Ministry of Land and Resources said in a statement yesterday that BYD used land illegally in Shaanxi, and that it will disclose findings from an investigation and possible punishments by the end of September. Investor concerns over the accusation are dragging down BYD's shares today, said Johnny Wong, a Hong Kong-based analyst with Yuanta Securities HK Co.

"Unfortunately there is not a lot of information to be had in terms of what the infraction was and what the possible penalty is," said Wong. "Investors are just preparing for the worst."

BYD, the fastest-growing carmaker by sales in China last year, increased sales in the nation by 3.3 percent in June from a year earlier, lagging behind the 23 percent industrywide gain, according to data from the China Association of Automobile Manufacturers.

"We are handling the issue and we believe it won't have any impact on our production and operations," Paul Lin, BYD's Shenzhen-based spokesman said yesterday by phone. He didn't immediately answer calls to his cell phone today when contacted by Bloomberg News for additional comment.

Buffett's Omaha, Nebraska-based Berkshire Hathaway Inc, holds a 10 percent stake in BYD. The Chinese company plans to offer all-electric e6 hatchbacks in the US this year, following the domestic success of its gasoline-powered F3, China's best-selling car last year.