BYD's shares fell by more than 8%

On Monday, BYD's Shares  fell by more than 8% in Hong Kong trade after the firm posted worse than expected first half earnings. Its net profit for the six months to June this year fell by 15.5% to $58.6m (£35.3m). It did recovered later, but only by 2.24%.

"Due to the intense competition in the automobile market and the change of subsidy policy for energy-efficient automobiles, the market share of China's local brands has shrunken by 3.48 percentage points as compared with that of last year," the firm said.

In 2009, China's car market was the largest car market of the world. However, the Chinese government is trying to reduce the competition as and manufacturer to reduce the pollution. After the removal of subsidies for traditional car purchases, in mid-2010, sales growth started to decline.

BYD's  traditional fuel cars sales fell by 27% during the six months to June from a year earlier and due to continued slowdown in traditional car sales, the company expects weak third-quarter earnings. This increases the chance for further decline in share price.

Even though there's competition between domestic and foreign car manufacturers, the company said sales of its so-called new energy vehicles had grown compared to a year earlier.

BYD's overall first half revenue rose 4% from a year earlier.