BYD's earnings plummet 94pc

Chinese carmaker BYD, backed by billionaire investor Warren Buffett, posted a 94 per cent drop in first-half earnings, underperforming most of its rivals as sales sagged and its solar energy business lost money.

The outlook remains challenging as China's car market, the world's largest, is seeing only sluggish growth, and the solar panel-making operation is under pressure from a euro-zone crisis that has sapped global demand.

"The Buffett halo effect has long faded. BYD has been dragged down by its solar business and the S6 seems to be the only car holding up well," said Sheng Ye, associate research director for Greater China at industry consultancy Ipsos, referring to BYD's sport utility vehicle, which was last year named the mainland's "SUV of the Year".

Ye was speaking before the earnings were announced late yesterday. In a stock exchange filing, BYD blamed the profit slide on slowing car sales, a weak domestic economy and the spreading euro-zone debt crisis, and warned about challenges ahead.

"Our business is fairly directly affected by the changing economic situation at home and abroad," said the company, which is 10 per cent owned by Buffett's Berkshire Hathaway.

"The future downward pressure on the global and Chinese economies may affect demand for our core businesses in key markets, and would affect our performance to a certain extent."