Periodic/Sector reports
Automobile: China Auto Sector Weekly
Highlights
- China and the EU have agreed on a hybrid export quota. China will cut the export VAT rebate on EVs to 9% from 13% from 1 Apr 27. BYD and Geely can navigate these measures by producing overseas.
- Lithium carbonate prices are weaker than expected; downgrade Ganfeng Lithium from BUY to HOLD.
- RoboSense’s 3Q26 LiDAR sales volume rose 221% yoy and 53% qoq, in line. However, its 3Q26 bottom line was dragged by the product recall.
- Maintain MARKET WEIGHT. Top BUYs: BYD, Geely, and CATL. Top SELLs: Li Auto, and XPeng.
Analysis
- September PV sales down 9.3% yoy and up 8.2% mom, with domestic sales decline offsetting export growth. China Passenger Car Association (CPCA) reported China’s Sep 26 passenger vehicle (PV) wholesale sales at 2.566m units (-9.3% yoy/+8.2% mom), domestic retail sales at 1.631m units (-28.1% yoy/+5% mom), and export at 923,000 units (+73.2% yoy/+3.2% mom), in line with our estimates. China’s PV export growth ytd was driven by EVs. Among the 923,000 units of PV exports, 559,000 units (+163.7% yoy/+7.7% mom) or 60.6% were EVs.
- China-EU hybrid deal: A 350,000-unit quota pushes Chinese OEMs to build cars in Europe. After talks in Beijing on 8-9 October, China accepted a quota on hybrid exports to the EU. Bloomberg reported that the cap would be 350,000 units a year from as early as 1 Dec 26, rising 6% a year from the second year over four years; the European Commission has not published the figure. China’s Ministry of Commerce said the quota is set based on the 302,000 China-made hybrids the EU imported in 2025 and an annual growth rate. The deal is yet to be finalised, and EU leaders will discuss further at the 15-16 October summit.
Highlights
- China and the EU have agreed on a hybrid export quota. China will cut the export VAT rebate on EVs to 9% from 13% from 1 Apr 27. BYD and Geely can navigate these measures by producing overseas.
- Lithium carbonate prices are weaker than expected; downgrade Ganfeng Lithium from BUY to HOLD.
- RoboSense’s 3Q26 LiDAR sales volume rose 221% yoy and 53% qoq, in line. However, its 3Q26 bottom line was dragged by the product recall.
- Maintain MARKET WEIGHT. Top BUYs: BYD, Geely, and CATL. Top SELLs: Li Auto, and XPeng.
Analysis
- September PV sales down 9.3% yoy and up 8.2% mom, with domestic sales decline offsetting export growth. China Passenger Car Association (CPCA) reported China’s Sep 26 passenger vehicle (PV) wholesale sales at 2.566m units (-9.3% yoy/+8.2% mom), domestic retail sales at 1.631m units (-28.1% yoy/+5% mom), and export at 923,000 units (+73.2% yoy/+3.2% mom), in line with our estimates. China’s PV export growth ytd was driven by EVs. Among the 923,000 units of PV exports, 559,000 units (+163.7% yoy/+7.7% mom) or 60.6% were EVs.
- China-EU hybrid deal: A 350,000-unit quota pushes Chinese OEMs to build cars in Europe. After talks in Beijing on 8-9 October, China accepted a quota on hybrid exports to the EU. Bloomberg reported that the cap would be 350,000 units a year from as early as 1 Dec 26, rising 6% a year from the second year over four years; the European Commission has not published the figure. China’s Ministry of Commerce said the quota is set based on the 302,000 China-made hybrids the EU imported in 2025 and an annual growth rate. The deal is yet to be finalised, and EU leaders will discuss further at the 15-16 October summit.
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