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Buffett's Chinese automaker stumbles

 Chinese car maker BYD Co. (OTC: BYDDF) posted strong sales in 2008 and 2009 and predicted that sales in 2010 would nearly double, to about 800,000 units. In August, the company, in which a subsidiary of Warren Buffett’s Berkshire Hathaway, Inc. (NYSE: BRK-A; BRK-B) owns 10%, reduced its projections to 600,000 units after selling just 286,000 cars in the first half of 2010.The other shoe has now dropped, as BYD reported full-year sales of just 519,806 units. Sales over the last six months weren’t even able to keep up the pace set in the first six months of the year.Competition from General Motors Co. (NYSE: GM), Ford Motor Co. (NYSE: F), and others, including Volkswagen AG, strengthened during the year, and BYD was forced to lower selling prices. The government, which had been offering generous subsidies, began lowering its incentives in mid-year and Chinese car buyers stopped visiting the showrooms.BYD also failed to bring its promised all-electric ‘e6′ model to the US market in 2010, as it had promised to do. The e6 is now scheduled for introduction later this year, but an all-electric car is not going to make up for sales lost to increasing competition and what BYD’s own head of sales told Bloomberg is a coming price war.For the coming year, BYD did not offer a sales or revenue forecast, saying only that it will improve its operation quality, product quality, channel management and profitability. The company will need all that and perhaps more, after missing profit estimates by more than 90%.Estimates for China’s auto market in 2011 vary from at least one forecast for the first negative growth in 25 years, to market growth of about 10%. The growth is based on China’s still booming GDP growth and continuing, if smaller, government subsidies for fuel-efficient vehicles.If BYD grows its sales by 10%, that will still leave it with about 5% less growth at the end of 2011 than the company had predicted for 2010. The 800,000-unit sales figure could be a decade away.