HONG KONG (Reuters) - Two of the biggest dealers for the Warren Buffett-backed Chinese automaker BYD (1211.HK) have stopped paying an advance subsidy of 120,000 yuan ($18,850) to buyers of its electric cars, a newspaper said, putting further pressure on BYD’s shares after a recent accident involving one of its vehicles.
The dealers in the southern Chinese city of Shenzhen said buyers would have to pay the full price of around 369,700 yuan and then claim the subsidy from the government themselves, the South China Morning Post reported on Monday.
Shares of BYD fell as much as 5.1 percent in early trade, underperforming a 2.5 percent fall on the blue-chip Hang Seng Index .HSI. The stock has fallen 47 percent from its year high in early February.
BYD fell more than 3 percent last week as police investigated the cause of a deadly accident late last month in which one of its electric vehicles caught fire.
BYD spokesman Paul Lin told the newspaper he did not believe the dealers’ decision would affect sales.
“In Europe and the United States, it is the buyer’s responsibility to claim the subsidies. In China, dealers do that for the customers to boost demand, and now they find demand better than supply,” he said.
BYD was not immediately available to comment on Monday.
Buyers of BYD’s electric cars in Shenzhen are entitled to a total of 120,000 yuan in subsidies, half from the central government and half from the municipal government, as part of Beijing’s policies to promote environmentally friendly cars.
The newspaper quoted two dealers as saying the advance subsidy had become a burden on their liquidity as it could take nearly a year to get back from the government. However, another dealer said claims were settled within two months.
($1 = 6.3690 Chinese yuan)
Reporting by Alison Leung; Editing by Richard Pullin