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BYD shares slumped by as much as 9% in Hong Kong recently, after several analysts cut their outlook on the company.

The stock has already lost more than a quarter of its market value recently. 

First-half net income fell 89% to 275 million Yuan ($43m;£26m) from the same period a year earlier on lower sales.

The Shenzhen-based carmaker also warned of another possible loss in the third-quarter.

The company said vehicle sales in China fell after the government withdrew stimulus policies, such as preferential tax for small cars.

It's also facing increased competition in the world's biggest auto market from foreign rivals like General Motors and Volkswagen.

Profits at BYD's battery, cell phone parts and assembly businesses have also fallen, which it attributed to competition and higher costs.

Zhang Yu, an analyst at AJ Securities, said it needs to change its strategy.

"The challenge facing BYD is more than a market slowdown. BYD had been expanding too fast in the past years," he said.

Billionaire US investor Warren Buffett owns about 10% of BYD through his company MidAmerican Energy. 

His stake in BYD has lost about $2bn of value since its peak, but is still trading at nearly double what he paid for it.

The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.

Published on our website on August 25, 2011