20260731-招银国际-Sequential_rebound_2H26_outlook_2Q26_earnings_preview_21页_1mb

Auto Sector 2H26 Outlook & 2Q26 Earnings Preview Summary

Core Content

This report provides an outlook on the Chinese auto sector for the second half of 2026 (2H26), focusing on the resilience of the wholesale market despite a weak retail environment in the first half of 2026 (1H26). The analysis highlights the role of exports, product mix shifts, and policy stimulus in shaping the sector's performance.

Main Points

• Retail Weakness:

  • 1H26 PV retail sales volume fell 19% YoY to 8.72mn units.
  • NEV retail sales volume dropped 14% YoY to 4.53mn units.
  • The decline was most severe in lower-tier cities and sub-RMB200k vehicles due to subsidy phase-out and macroeconomic headwinds.

• Wholesale Resilience:

  • 2026 PV wholesale volume is projected to rise 2.2% YoY to 30.77mn units.
  • Export growth, particularly of NEVs, is a key driver of this resilience.
  • Total exports are expected to increase by 75% YoY to 10.55mn units, with NEV exports rising 133% YoY to 5.5mn units.

• Earnings Divergence in 2Q26:

  • OEMs with a stronger product mix and higher overseas sales are expected to outperform.
  • Geely, BYD, Leapmotor, and NIO are highlighted as potential earnings surprises.
  • Xpeng may see a significant narrowing of net loss, while Li Auto may experience a wider net loss.

• Upmarket Shift:

  • OEMs are shifting towards larger, premium vehicles (RMB200k+) to mitigate the impact of subsidy reductions.
  • C-class and D-class models are expected to represent 34% and 14% of new launches in 2026, respectively.

• Export Trends:

  • Europe is the largest export destination, with PV exports rising 89% YoY to 0.97mn units.
  • Russia remains the top single market, followed by Brazil, UK, Belgium, and Australia.
  • Middle East and Mexico saw declines due to geopolitical tensions and tariffs.

• NEV Market Dynamics:

  • NEV retail market share fell to 51.9% in 1H26, but is expected to rise to 58.4% for the full year.
  • BEVs gained market share over PHEVs, driven by technological improvements and higher oil prices.

• Investor Outlook:

  • The report recommends a bottom-up approach to stock selection over top-down industry volume analysis.
  • Geely and Horizon Robotics are top picks, with a preference for OEMs with strong global expansion and product premiumization.
  • Policy stimulus is viewed as an under-priced upside catalyst, especially in the current bearish market environment.

Key Information

• 2026 Forecast Adjustments:

  • PV retail volume: 20.65mn units (-11.2% YoY)
  • PV wholesale volume: 30.77mn units (+2.2% YoY)
  • NEV retail volume: 12.05mn units (-2.7% YoY)
  • NEV wholesale volume: 18.09mn units (+17.1% YoY)
  • PV exports: 10.55mn units (+74.8% YoY)
  • NEV exports: 5.5mn units (+132.9% YoY)

• Stock Picks:

  • Geely (175 HK): BUY, target price 27
  • BYD (1211 HK, 002594 CH): BUY, target price 125
  • Leapmotor (9863 HK): BUY, target price 60
  • NIO (NIO US, 9866 HK): BUY, target price 7 and 55
  • Xpeng (XPEV US, 9868 HK): BUY, target price 21 and 82
  • Li Auto (LI US, 2015 HK): HOLD, target price 16 and 62
  • GWM (2333 HK, 601633 CH): BUY, target price 19 and 28.5
  • GAC (2238 HK, 601238 CH): BUY, target price 4.2 and 9
  • Horizon Robotics (9660 HK): BUY, target price 7.8
  • Zenergy (3677 HK), Minth (425 HK), Refire (2570 HK), Yongda (3669 HK), Meidong (1268 HK), EVA (838 HK): BUY

• Catalysts for 2H26:

  • Retail decline is expected to moderate.
  • New policy stimulus could act as a positive catalyst.
  • Continued export growth and upmarket positioning are expected to drive sequential rebound in wholesale volume and earnings quality.

Figures and Data Highlights

• 1H26 PV Retail Volume: 8.72mn units (-18.6% YoY)

• 1H26 PV Wholesale Volume: 12.72mn units (-6.0% YoY)

• 1H26 NEV Retail Volume: 4.53mn units (-14.2% YoY)

• 1H26 NEV Wholesale Volume: 6.88mn units (+5.7% YoY)

• 1H26 PV Export Volume: 4.43mn units (+71.6% YoY)

• 1H26 NEV Export Volume: 2.18mn units (+128.4% YoY)

• Top 10 NEV OEMs in 1H26:

  • BYD (-37.2% YoY)
  • Geely (-13.0% YoY)
  • Changan (-12.9% YoY)
  • Leapmotor (+45.1% YoY)
  • NIO (+67.7% YoY)
  • Li Auto (-8.0% YoY)
  • Xiaomi (+17.8% YoY)
  • Seres (+8.4% YoY)

• Export Growth by Region:

  • Western Europe: +89% YoY
  • Latin America: +57% YoY
  • Eastern Europe: +106% YoY
  • Southeast Asia: +51% YoY
  • Middle East: -27% YoY
  • North Africa: +112% YoY
  • Oceania: +86% YoY
  • Central Asia: +39% YoY

• 2H26 PV Retail Forecast: 11.93mn units (-5% YoY, +37% HoH)

• 2H26 PV Wholesale Forecast: 18.05mn units (+9% YoY, +42% HoH)

• 2H26 PV Export Forecast: 6.12mn units (+77% YoY, +38% HoH)

Conclusion

The Chinese auto sector is expected to show a sequential rebound in 2H26, driven by strong export performance and upmarket shifts. While retail weakness persists, the wholesale market remains resilient, supported by robust export growth and improved product mix. OEMs with a strong global presence and premiumization strategy are favored, and policy stimulus could provide additional upside. The report underscores the importance of bottom-up analysis and the potential for earnings surprises among certain players.