The BYD F6 sedan from the relatively new, ambitious carmaker. Its F3 compact was 2009's top-selling car, a rank it maintained in the first half of this year.
Hong Kong-listed battery and auto maker BYD Co has seen a sharp drop in its stock price in the past few weeks following its failure to meet a first-half sales target and recent controversy about land for its second factory in Shaanxi province.
The share price of the Warren Buffett-backed company dropped to HK$47.9 ($6.16) last Monday, the lowest since September last year, compared with a peak of HK$84 ($10.8) in April.
The decline can in part be attributed to the wide expectation that the Chinese auto market will cool in the second half as well as BYD falling far short of its first-half sales goal of 400,000 units, Zeng Zhiling, a Shanghai-based automotive analyst at IHS Global Insight, told China Daily.
BYD moved nearly 290,000 cars in the first six months, only 36 percent of its full-year goal of 800,000 units.
Yet Zeng added that the company has actually registered good sales growth as its first-half tally surged 63.5 percent from a year earlier.
Recent news about BYD's alleged illegal use of land also caused concern among investors and dragged down its share price, Zeng said.
Earlier this month, China's Ministry of Land and Resources said that BYD is illegally using land in Shaanxi province and local authorities have been asked to investigate.
The ministry said details of the investigation and possible punishments will be disclosed by the end of September.
BYD began construction of a new 5 billion yuan facility in Xi'an, capital of Shaanxi province, last year that when complete will cover 4,500 mu, or 300 hectares. The plant is scheduled to begin production next year and reach a capacity of 400,000 units annually by 2013.
A report in the Economic Observer newspaper said BYD didn't follow procedures before beginning to develop the land. The report cited an anonymous insider as saying BYD made the reckless move because it believed it had to speed up construction due to strained capacity at its existing facilities.
The company currently runs plants in Shenzhen and Xi'an with combined capacity of 500,000 units a year, which is apparently not enough to meet the 800,000-unit goal.
The project in Xi'an has been suspended due to the government investigation, according to Chinese-language media reports.
But in a statement to the Hong Kong stock exchange last Tuesday, BYD said that the dispute will have no "material adverse impact" on its business operations and financial status.
The company also said it is not in acquisition talks and doesn't know the reason for the recent decline in its share price.
The impact on BYD is unclear and it depends on how the government deals with the issue, said Zhang Xin, an auto industry analyst with Guotai Jun'an Securities.
Zeng at IHS Global Insight said the suspension of BYD's Xi'an project may affect the company's future plan to offer new models.
The company last Tuesday launched its first multi-purpose vehicle, the M6, in Shenzhen. The company plans to introduce four other models - the L3, S6, i6 and G6 - later this year.
As a newcomer that joined the highly competitive market in 2003, BYD developed rapidly to become one of China's top 10 car producers last year, when its F3 model was the best-selling sedan in the nation.
The ambitious company could even be stretching out to make appliances such as air-conditioners and refrigerators that can be used in cars and large-screen LED televisions for home use, according to recent Chinese media reports - information the company has not yet confirmed.
