Periodic/Sector reports
Automobile: China Auto Sector Weekly (26 Sep-8 Oct 26)
Highlights
- We cut our 2026-28 sales estimates for auto OEMs, based on lower-than-expected 9M26 sales.
- 2027 sales are poised for a modest recovery on stabilisation of domestic sales and sustained buoyant export growth.
- Trade barriers to China’s EVs are rising globally through tariffs and localisation rules that force Chinese OEMs from exports to local production. This favours the leading OEMs – BYD and Geely.
- Maintain MARKET WEIGHT. Top BUYs: BYD, Geely, CATL. Top SELLs: Li Auto, XPeng.
Analysis
- Auto OEMs’ 9M26 sales came in below estimates, due to weaker-than-expected domestic market and ICE-car sales amid the expiry of the purchase tax exception and spike in oil prices.
- BYD (1211 HK/BUY/Target: HK$140.00) has resumed positive yoy sales growth since May. Monthly sales recovered from a recent trough of 190,190 units (-41% yoy/-9% mom) in Feb 26 to 463,561 units (+17% yoy/+5% mom) in Sep 26, the seventh month of positive growth in a row. This brings 9M26 sales to 3.13m units (-3.9% yoy). Attaining BYD’s 2026 sales target of 5m units requires average monthly sales of 622,800 units (+39% yoy) in 4Q26, well above September sales of 463,561 units.
- Geely (175 HK/BUY/Target: HK$29.00) has kept positive yoy sales growth ytd. Monthly sales remained at 200,000-300,000 units ytd, with export growth offset by a drop in domestic sales. September sales grew 7% yoy and 8% mom to a ytd record of 292,168 units, bringing 9M26 sales to 2.235m units (+3% yoy). It requires average monthly sales of 404,840 units (+42% yoy) in 4Q26 to reach Geely’s 2026 target of 3.45m units.
Highlights
- We cut our 2026-28 sales estimates for auto OEMs, based on lower-than-expected 9M26 sales.
- 2027 sales are poised for a modest recovery on stabilisation of domestic sales and sustained buoyant export growth.
- Trade barriers to China’s EVs are rising globally through tariffs and localisation rules that force Chinese OEMs from exports to local production. This favours the leading OEMs – BYD and Geely.
- Maintain MARKET WEIGHT. Top BUYs: BYD, Geely, CATL. Top SELLs: Li Auto, XPeng.
Analysis
- Auto OEMs’ 9M26 sales came in below estimates, due to weaker-than-expected domestic market and ICE-car sales amid the expiry of the purchase tax exception and spike in oil prices.
- BYD (1211 HK/BUY/Target: HK$140.00) has resumed positive yoy sales growth since May. Monthly sales recovered from a recent trough of 190,190 units (-41% yoy/-9% mom) in Feb 26 to 463,561 units (+17% yoy/+5% mom) in Sep 26, the seventh month of positive growth in a row. This brings 9M26 sales to 3.13m units (-3.9% yoy). Attaining BYD’s 2026 sales target of 5m units requires average monthly sales of 622,800 units (+39% yoy) in 4Q26, well above September sales of 463,561 units.
- Geely (175 HK/BUY/Target: HK$29.00) has kept positive yoy sales growth ytd. Monthly sales remained at 200,000-300,000 units ytd, with export growth offset by a drop in domestic sales. September sales grew 7% yoy and 8% mom to a ytd record of 292,168 units, bringing 9M26 sales to 2.235m units (+3% yoy). It requires average monthly sales of 404,840 units (+42% yoy) in 4Q26 to reach Geely’s 2026 target of 3.45m units.
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