Analysis of the Impact of BYD's European Market Sales Growth on Gross Margin Improvement

According to the latest financial data[0], BYD achieved total vehicle sales of 4.272 million units in 2024, a year-on-year increase of 41.2%, of which overseas sales reached 417,000 units, a year-on-year increase of 71.8%[1]. The company’s comprehensive gross margin in 2024 was 19.4%, an increase of 0.9 percentage points year-on-year; the gross margin of the automotive business was 22.3%, a decrease of 0.7 percentage points year-on-year[1].

This strong correlation indicates that the expansion of the European market has had a significant positive impact on overall profitability.

From a historical trend perspective, between 2021 and 2024, BYD’s overseas sales grew from 40,000 units to 417,000 units, with a compound annual growth rate of over 80%; during the same period, the comprehensive gross margin increased from 13.0% to 19.4%, a cumulative increase of 6.4 percentage points. It is particularly noteworthy that overseas sales increased by 187,000 units in 2023, directly driving the gross margin up by 4.1 percentage points year-on-year, showing a strong marginal contribution effect of overseas business on gross margin[0].

According to industry analysis data, BYD faces lower competition intensity in overseas markets and has obvious cost-performance advantages. Taking BYD Han EV as an example, its terminal price in the European market is about RMB 450,000, which is 50% higher than the domestic price, but the production cost only increases by about 12%[1].

This price advantage translates into significant profit margins: BYD’s average overseas unit price is about 239,000 yuan, far higher than the domestic market’s 124,000 yuan[1]. This means that each car exported to the European market contributes significantly more profit than the same model in the domestic market.

Based on the 2024 financial data, BYD’s total overseas revenue reached 221.884 billion yuan, accounting for 28.55% of the group’s total revenue[1]. Calculated by the weighted average method, assuming the domestic automotive business gross margin is about 17%, while the overseas business gross margin is about 22% (5 percentage points higher than domestic), the contribution of overseas business to the overall gross margin is about

.

In other words, without the high-margin support of overseas business, especially the European market, BYD’s comprehensive gross margin in 2024 might only remain at around 18% instead of the actual 19.4%. The growth in European market sales directly contributed about 7.4% of the gross margin increase.

Looking ahead to 2025, Morgan Stanley predicts that BYD’s overseas sales will reach 1.6 million to 1.8 million units, a year-on-year increase of 68% to 89%[1]. Citigroup expects BYD’s sales to reach 4.67 million and 5.39 million units this year and next, respectively, with explosive growth in the European, Southeast Asian and Latin American markets as the core drivers[1].

Overseas business contributed about 1.4 percentage points to the gross margin increase, and with the acceleration of European market penetration and localized production, this contribution is expected to continue to expand. Investors are advised to focus on BYD’s market share growth and profitability improvement in the European market; overseas business will become an important engine for the company’s medium- and long-term profit growth.

---

[0] Jinling AI Financial Database - BYD(002594.SZ) Financial Data and Company Profile
[1] Securities Times - “Earning 110 million yuan per day, revenue surpassing Tesla: BYD’s trio of technology, market and ambition” (https://www.stcn.com/article/detail/1609761.html)
[2] BOCOM International - “BYD Company(1211 HK) Performance Meets Expectations, Export Expansion + Intelligent Driving Democratization Double Engines Drive Growth” (https://pdf.dfcfw.com/pdf/H3_AP202503251647371606_1.pdf)
[3] Nanfang+ - “BYD Achieves Revenue of 566.3 Billion Yuan in the First Three Quarters, Overseas Expansion May Become a New Growth Engine” (https://www.nfnews.com/content/VoQVln9by5.html)