匯豐-新興市場情緒調查第24期：熊市無立足之地 -China Autos：Weaker demand ongoing consolidation-260724

bHSBCGObalnvestmentResearch24July2026

ChinaAutos

Equities

Automobiles

Weakerdemand,ongoingconsolidation

China

uLower2026forecastsonweaker-than-expected1H26demand

uOngoingconsolidationandpricingpressurecontinuetoweighonsectorearnings

uReviseOEMforecastsandremainselectiveonstockpicks;downgradeGreatWallA/HtoHold/Hold;cutTPs

Demandhassoftenedfasterthanexpected:Welowerour2026ChinapassengervehicleandEVdemandy-o-ygrowthforecaststo-13%(from-5%)and-6%(from

+10%),respectively,followingaweaker-than-expected1H26.ThelatestCPCAdatacontinuetopointtosoftdemand,with1-19Julypassengercarretailvolumedown

16%y-o-yandNEVretailvolumedown4%y-o-y.Replacementdemandhas

moderatedafterthesubsidy-drivenpull-forward,whileconsumershavebecome

increasinglyselectivegivenfrequentproductlaunchesandamorecompetitive

market.Althoughweexpectdemandtoimprovesequentiallyin2H26,webelievetherecoverywillbemoregradualthanpreviouslyanticipated.

Industryconsolidationstillinprocess,whiledomesticpricinglikelytoremain

underpressure:RisingEVpenetrationcontinuestoreshapeChina’sautomarket,butindustryprofitabilityremainsunderpressure.Intensecompetition,persistentpricing

pressureandelevatedinventoriesattraditionalOEMscontinuetoweighonmargins,

particularlyforjoint-venturebusinesses.Atthesametime,exportsremainanimportantsourceofgrowth,helpingleadingChineseOEMspartiallyoffsetsofterdomestic

demand.Wethereforeexpectindustryconsolidationandearningsdivergencetocontinueasstrongerplayersfurtherextendtheircompetitiveadvantages.

Stockselectionmattersmorethansectorexposure:WhileGreatWall’sshares

havealreadycorrectedsignificantly,webelieveearningsvisibilityhasweakened

furtherfollowingsofter-than-expectedQ2guidance,lowerindustrydemand

expectationsandcontinueduncertaintyaroundtheRussiascrappagetaxrefund.WethereforedowngradeGreatWallA/HsharesfromBuytoHold,whilemaintainingHoldonGACA/HsharesandBAIC.WecontinuetopreferOEMswithstrongerexport

franchises,competitivelocalbrandsandhealthierproductcycles,anddonotyetseeconditionsforabroadersectorre-rating.Untilindustrydemandandprofitability

stabilize,weexpectexecutiondifferencestodriveperformancedivergence.

YuqianDing*

HeadofChinaTechnology&AutosResearch

TheHongkongandShanghaiBankingCorporationLimited

yuqian.ding@.hk

+85222885108

LiYang*

Analyst,ChinaAutos

TheHongkongandShanghaiBankingCorporationLimited

li01.yang@.hk

+85222886216

*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulations

Nocountryforbears

The24theditionoftheEMSentimentSurvey

Clicktoview

Keychangestoratingsandtargetprices

Ticker

Company

Ccy.

MarketCap(USDm)

3MADTV

(USDm)

Close

price

_____

Targetprice

________

Rating

Upside/downside

2026e

PBROE

2027e2028e2026e2027e

2028e

Old

New

Old

New

601633CH

GreatWallA

CNY

17,501

56

16.09

31.20

15.90

Buy

Hold

1%

1.4

1.3

1.2

11%

13%

14%

2333HK

GreatWallH

HKD

20,178

24

9.09

21.60

9.30

Buy

Hold

-2%

0.7

0.6

0.6

11%

13%

14%

601238CH

GACA

CNY

6,351

23

5.10

8.23

5.08

Hold

Hold

0%

0.5

0.5

0.5

-6%

0%

2%

2238HK

GACH

HKD

6,351

5

2.19

3.62

2.13

Hold

Hold

3%

0.2

0.2

0.2

-6%

0%

2%

1958HK

BAIC

HKD

889

1

0.87

2.20

0.80

Hold

Hold

9%

0.1

0.1

0.1

-2%

-1%

0%

Source:Bloomberg,HSBCestimates.Pricedasofcloseon21Jul2026

Disclosures&Disclaimer

ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.

Issuerofreport:TheHongkongandShanghaiBankingCorporationLimited

ViewHSBCGlobalInvestmentResearchat:

bHSBC

Equities●Automobiles

24July2026

2

Demandreset,ongoingconsolidation

uWetrimour2026Chinaautodemandforecastsonweakerdemand

uConsolidationcontinuesascompetitionweighsonprofitability,despiterisingEVpenetration

uWeremainselectiveonstocks;cutestimatesonGreatWall,GACandBAIC,anddowngradeGreatWallA/HtoHold/Hold

Demandreset;recoverypushedfurtherinto2H26

TrimPCandEV2026edemand;turningpointmightcomeinSeptember

In1H26,China’spassenger-vehicleretailsalestotalled8.72munits,a20%y-o-ydecline,whileEVsalesreached4.7munits,down14%y-o-y.ThelatestCPCAweeklydatasuggestdemand

remianedsoftintoJuly,withpassengercarretailvolumedown16%y-o-yandNEVretailvolume

down4%y-o-yduring1-19July.Besidethebroaderlowlevelofoverallconsumerpropensity,thereducedreplacement-subsidysupportlikelypulledforwarddemandinto2025,leavingless

momentumin1H26.Ontheindustryside,whileheadlinepricewarshavebeencontained,

manufacturershavecompetedbylaunchingmorenewmodelswithimprovedspecificationswithoutraisingprices.Giventhemarketisincreasinglyreplacement-led,fasterproductrefreshcyclesmaybereinforcinga“wait-and-see”approachamongbuyers,extendingreplacementtimelines.

Againstthisbackdrop,wehaverevisedour2026Chinapassenger-cardemandgrowthforecastto-13%(from-5%).Wemaintaina-2%y-o-yforecastfor2027,aswestillexpectsomedemandtobepulledforwardintolate2026aheadoftheanticipatedphase-outofreplacementsubsidies.WehavealsoloweredourEVpenetrationassumptionsfollowingweaker-than-expected1H26EVsales

growth;ourupdatedEVpenetrationforecastsfor2026–28are58%,65%,and71%,respectively.

Inourupdatedforecasts,weexpectamodestsequentialrecoveryin2H26,withthey-o-ydecline

narrowingto7%,drivenmainlybyaseasonalupliftfromSeptemberandrefreshedproductline-ups

(180+newmodelsin2H26)toreigniteconsumerinterest,alongsidealikelypre-buyingwavein4Q26aheadofthepotentialexpiryofthereplacementsubsidiespolicyatend-2026.

Exhibit1.ChinapassengercarandEVdemandforecastchanges

NewforecastsOldforecastsChange

2026e2027e2028e2030e2026e2027e2028e2030e2026e2027e2028e2030e

PVvolume(inmunits)

20.6

20.2

20.2

20.2

22.5

22.1

22.1

22.1

-8%

-8%

-8%

-8%

PVvolumey-o-ygrowth(%)

-13%

-2%

0%

0%

-5%

-2%

0%

0%

-8%

0%

0%

0%

EVvolume(inmunits)

12.0

13.2

14.3

16.7

14.1

15.5

17.0

19.5

-15%

-15%

-16%

-15%

EVvolumey-o-ygrowth(%)

-6%

10%

8%

8%

10%

10%

10%

6%

-16%

0%

-2%

2%

EVpenetration(%)

58%

65%

71%

82%

62%

70%

77%

88%

-4%

-5%

-6%

-6%

Source:HSBCestimates.PV:passengervehicle.EV:electricvehicle.

bHSBC

Equities●Automobiles

24July2026

3

Exhibit2.Wetrim2026edemandgrowthto-13%y-o-y,-6%forEV

25.0

20.0

15.0

10.0

5.0

-

20162017201820192020202120222023202420252026e2027e2028e

EVPVvolume(inmnunits)ICEPVvolume(inmnuntis)EVpenetration(RHS)

EVy-o-ygrowth(RHS)overally-o-ygrowth(RHS)

120%

100%

80%

60%

40%

20%

0%

-20%

Source:CPCA,HSBCestimates

Exhibit3.EVpenetrationrateremainedat63%inJune2026

JanFebMarAprMayJunJulAugSepOctNovDec2026EV(PV)retailvolume

2025EV(PV)retailvolume

2026monthlypenetrationrate(RHS)

2025monthlypenetrationrate(RHS)

61%63%63%

52%45%

39%

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

-

80%

70%

60%

50%

40%

30%

20%

Source:CPCA,HSBC

Exhibit4.Overallautoretailsalesdecreased20%y-o-yin1H26

JanFebMarAprMayJunJulAugSepOctNovDec

2026monthlysalesvolume2025monthlysalesvolume

2026y-o-ygrowth(RHS)2025y-o-ygrowth(RHS)

2,500,000

2,000,000

1,500,000

1,000,000

500,000

-

30%

20%

10%

0%

-10%

-20%

-30%

-21%-22%-23%

-14%-25%

-15%

Source:CPCA,HSBC

ICEsegmentundersiege:structuralcontractionacceleratesin2026

RetailsalesofICEvehiclesfell26.3%y-o-yin1H26,withthedeclinewideningsharplyin2Q(_38.2%)versus1Q(_14.3%).DemandwascomparativelyresilientonlyintheRMB200k–300kpriceband;bycontrast,ICEdemandweakenedmateriallyinboththemassmarketandpremiumsegmentsabove

RMB300k(down24–36%).Asconsumersweighedrefuellingandrunningcostsalongsidesmartcockpitandintelligentdrivingcapabilities,preferencescontinuedtoshifttowardsEVs.

Onthesupplyside,pressureintensified.WhileinventoryindicatorsforJVbrandsandtraditionalluxurybrandseasedm-o-minJune,theyremainedwellabovethe1.5threshold.Dealers

sustainedelevateddiscountstoclearstock,furtherunderminingpricingdiscipline.OEMsalsocurtailednewICElaunches–12of102newmodelsin1H26,and16of184in2H26e–slowingproductrefreshcycles.WithICEproductcompetitivenesslaggingEVs,ICEmarketshare

continuedtobedisplacedacrossmostpricetiersin1H26.

Bybrand,high-endChineseEVs(Zeekr9X,NIOES8/ES9,XPengGX,etc)havecontinuedtopressureincumbentluxuryplayerssince2H25.Despiteongoingdiscounting,BMWandMercedes-Benzsaw

fasterdeclinesin1H26versus2025:BMW_20%y-o-y(vs_15%in2025)andMercedes-Benz_27%

y-o-y(vs_20%).Inthemass-marketsegment,ToyotaandVolkswagenreturnedtocontractionin1H26amidsoftertrade-insubsidiesversus2025:Toyota_9%y-o-yandVolkswagen_27%y-o-y.

bHSBC

Equities●Automobiles

24July2026

4

Lookinginto2H26,weexpectICEdemandtorecoversequentiallywiththepeakseason,

thoughthereboundshouldlagEVs.Thelong-termtrajectoryremainsunchanged:EVswill

continuetotakesharefromICEvehicles,withEVpenetrationprojectedtoreach82%by2030.

Exhibit5.ICEcarslostshareinmostpricesegmentsexceptRMB200k-300k

EV/ICEsharechange1H26vs.1H25

AboveRMB300kRMB200k-300kRMB150k-200kRMB100k-150kBelowRMB100k

-2%

EVICE

3%

2%

1%

0%

-1%

Source:CPCA,HSBC

Exhibit6.In1H26,ICEvehiclevolumescontractedsignificantlyacrossnearlyallpricesegments

-2%

-31%

-24%

-31%

-36%

5%

0%

-5%

-10%-15%-20%-25%-30%-35%

-40%

>300k200k-300k150k-200k100k-150k<100k

pricesegment(inrmb)

200

180

160

140

120

100

80

60

40

20

-

1H26volume1H25volumeyoy(%,rhs)

Source:CPCA,HSBC

Exhibit7.In1H26,demandforpremiumEVsprovedmoreresilient

2%1%5%

0%

-5%

-10%

-15%

-15%

-20%

-28%-25%

-30%

-35%

-40%

>300k200k-300k150k-200k100k-150k<100k

pricesegment(inrmb)

1H26volume1H25volumeyoy(%,rhs)

200

180

160

140

120

100

80

60

40

20

-

-10%

Source:CPCA,HSBC

Exhibit8.Chinaoverallpassengercarmarket:Top15brandstook60%sharein1H26

25%

BYD

VW

Toyota

Geely

Chery

Changan

Galaxy

Wuling

BMW

Audi

Tesla

Nissan

Leapmotor

Benz

Honda

0%

1H26Chinapassengermarketsharebybrand

Longtail:147brandsarecompetingfortheremaining40%ofthemarket(vs145brandsin2025,150brandsin2024)

Top15took60%marketsharein1H26(vs63%in2025,68%in2024)

20%

15%

10%

5%

Source:CPCA,HSBC

bHSBC

Equities●Automobiles

24July2026

5

Exhibit9.ChinaEVpassengervehiclediscountlevelatrelativelylowlevel…

30%

25%

20%

15%

10.1%10.4%10.6%10.9%9.6%9.1%

10%

5%

0%

JanFebMarAprMayJunJulAugSepOctNovDec202420252026

Source:CPCA,HSBC

Exhibit11.LuxuryICEcardiscountlevelsareevenhigher

28.8%

27.0%25.9%25.26.4%

24.0%

JanFebMarAprMayJunJulAugSepOctNovDec

202420252026

35%

30%

25%

20%

15%

10%

5%

0%

Source:CPCA,HSBC

Exhibit10.…whileICEstillunderpricingpressure

30%

25%23.73.502.70%

20%

15%

10%

5%

0%

JanFebMarAprMayJunJulAugSepOctNovDec202520242026

Source:CPCA,HSBC

Exhibit12.JVbrandsandconventional

luxurybrandsareathighinventorylevels

2.5

2

1.5

1

0.5

0

JanFebMarAprMayJunJulAugSepOctNovDec

JVICEbrands

Conventionalluxurybrands

Chinalocalbrands

Threshold

Source:CADA,HSBC

bHSBC

Equities●Automobiles

24July2026

6

MappingOEMstocks

Basedonourlowerindustrydemandforecasts,wecutourestimatesforGreatWall,GACand

BAIC,whicharerelativelyunderpressuregivenweakerEVcycles.WedowngradeGreatWall

A/HsharestoHoldfromBuyratings,andretainourHoldratingsonGACA/Hshares,andBAIC.

Exhibit13.Keychangestoratingsandestimates

Ticker

Company

Ccy.

MarketCap(USDm)

3MADTV

(USDm)

Close

price

Targetprice

________

Rating

Upside/downside

2026e

PBROE

2027e2028e2026e2027e2028e

Old

New

Old

New

601633CH

GreatWallA

CNY

17,501

56

16.09

31.20

15.90

Buy

Hold

1%

1.4

1.3

1.2

11%

13%

14%

2333HK

GreatWallH

HKD

20,178

24

9.09

21.60

9.30

Buy

Hold

-2%

0.7

0.6

0.6

11%

13%

14%

601238CH

GACA

CNY

6,351

23

5.10

8.23

5.08

Hold

Hold

0%

0.5

0.5

0.5

-6%

0%

2%

2238HK

GACH

HKD

6,351

5

2.19

3.62

2.13

Hold

Hold

3%

0.2

0.2

0.2

-6%

0%

2%

1958HK

BAIC

HKD

889

1

0.87

2.20

0.80

Hold

Hold

9%

0.1

0.1

0.1

-2%

-1%

0%

Source:Bloomberg,HSBCestimates.PricedasofcloseatJul21,2026

Webaseourvaluationsonprevailing/troughtradingPEmultiplesratherthanlongtermhistoricalaverages.Whilevaluationsappeardepressed,wedonotexpectameaningfulre-ratingoverourtargetpricehorizon,givenmuteddemand,ongoingpricingpressureandlimitedproductcycle

catalystsacrossconventionalOEMs.Intheabsenceofaclearearningsordemandinflection,

webelievecurrentmarketmultiplesbetterrepresentfairvaluethanhistoricalaverages.Thekeydebateisnotwhetherthesestocksarecheaponanhistoricalrangebasis,butwhetherthereisacatalystforthemarkettopayahighermultiple.Wethinktheanswerisnotyet.

Valuationandrisks

GreatWall

Lower2026-27enetprofitmainlyonweakerdomesticdemand

GreatWallMotorhasreleaseditsQ22026earningspreview,guidingnetprofitofRMB1.4–1.6bn,

belowourpriorexpectations.ThekeyheadwindisadelayintheRussianscrappagetaxrefund

process.AroundRMB2bnwasrefundablefortheperiodQ42025toQ12026;whilepartialreceipt

hadbeenexpectedinQ22026,thefundsarenowanticipatedbeforeyear-end.Additionally,despiteQ2salesrising17%q-o-q(vs+14%q-o-qforoverallpassengervehiclewholesalevolumes),

supportedbyexportmomentum(exportsales+24%q-o-q),its1H26volumesdropped12%y-o-y,drivenbyweakdomesticdemand.

GreatWall’sA-andH-sharesaredown27%and38%YTD,respectively(vsCSI300+2%andHSI-2%),reflectingweakdomesticautosectorbetaandongoingquarterlyearningsuncertaintylinkedto

theRussiantaxrefund.Lookingahead,weexpect2H26volumestoimprovewiththeseasonalupturnfromSeptemberandcontinuingexportgrowth,butstillforecastsofterfull-year2026growth,asweakdomesticdemandpartiallyoffsetsexportexpansion(wereduceour2026volumegrowthestimate

from10%to7%).ThetimingoftheRussianscrappagetaxrefundremainsakeyearningsrisk.Asaresult,wearemorecautiousonprofitabilityanddowngradebothA-andH-sharestoHoldfromBuy.

Earningsrevisions.Wecutour2026netprofitforecastby23%,mainlyonthefollowingchanges:

1.Volume:Reflectingweakerdomesticpassengervehicledemand,wereduceour2026wholesalevolumeforecastto1.41millionunits(from1.46million).

2.Grossmargin:Generally,weexpectalowergrossmarginforthecompanygivenlower

volumescale.Butitsexportsexpansion(weexpectmonthlyexportvolumestoreach~70kunitsbyyear-end)and2H26newcarswithrelativelyhighpricing(HavalH10,WEY

V9X/V8X,newTank300,andTank800)arelikelytopartiallyoffsetcostpressuresandlowerscale.Allinall,wereduceour2026grossmarginforecastto15.2%(from15.4%).

3.OPEX:Givenongoinginvestmentinnewmodelmarketingandoverseaschannel

expansion,weincreaseourOPEXratioestimateto11.0%(from10.3%).

bHSBC

Equities●Automobiles

24July2026

7

Wealsolowerour2027netprofitforecastby14%,primarilyduetoalowergrossmarginonweakerdomesticdemandandhigherOPEXassumptions.Weintroduceour2028forecastsinthisreport.

Exhibit14.Estimatechanges

(RMBm)

New

2026e2027e2028e

Old

2026e2027e2028e

Change

2026e

2027e

2028e

Revenue

240,667

280,600

291,336

240,579

252,153

NA

0%

11%

NA

GrossProfit(incl.D&A)

36,543

43,432

45,534

37,118

40,200

NA

-2%

8%

NA

GPM(incl.D&A)

15.2%

15.5%

15.6%

15.4%

15.9%

NA

-0.2ppts

-0.5ppts

NA

OPEXratio

11.0%

10.8%

10.3%

10.3%

10.3%

NA

0.7ppts

0.5ppts

NA

Netprofit

10,482

13,045

15,111

13,583

15,088

NA

-23%

-14%

NA

EPS(RMB)

1.22

1.52

1.77

1.59

1.76

NA

-23%

-14%

NA

Source:HSBCestimates

Exhibit15.OurestimatesvsBloombergconsensus

(RMBm)

HSBC

estimate

s

2026e

Consensus2027e

2028e

Di

fference

2026e

2027e

2028e

2026e

___

_______

2027e

2028e

Revenue

240,667

280,600

291,336

252,068

284,629

312,451

-5%

-1%

-7%

Netprofit

10,482

13,045

15,111

11,080

13,012

14,810

-5%

0%

2%

Source:Bloomberg,HSBCestimates

DowngradetoHold/HoldratingswithlowerTPsofRMB15.90andHKD9.30.WecontinuetouseaPEmethodologyandapplyatargetmultipleof13x(from20x;basedonGreatWall’saveragePE

overthelastthreemonths)toour2026EPSestimateofRMB1.22(previously2025eofRMB1.56),togetourrefreshedA-sharetargetpriceofRMB15.90(previouslyRMB31.20).

WealsoupdatetheGreatWallH-toA-sharevaluationdiscountto50%(previously37%),givenrecentlowerriskappetiteandliquidity.UsingHSBC’send-2026RMB-HKDexchangerateforecastof1.17

(fromend-2025’s1.10),wearriveatournewH-sharetargetpriceofHKD9.30(previouslyHKD21.60).

OurnewA-shareTPimplies3%downsidetocurrentlevels;ournewH-shareTPimplies2%

upsidetocurrentlevels;wethereforedowngradeourratingsforbothstockstoHold(fromBuy).FortheRMBcounter(82333HK)ofH-shares,weconvertourH-sharetargetpriceofHKD9.30toRMBbasedonHSBC’send-2026RMB-HKDexchangerateforecastof1.17(fromend-

2025’s1.10previously).ThisreturnsatargetpriceofRMB7.98(previouslyRMB19.66).

Keyupsiderisks:Stronger-than-expecteddomesticsalesofthenewmodelsandrefreshments;stronger-than-expectedoverseasvolumeexpansion;sooner-than-expectedRussiantaxrefund.

Keydownsiderisks:FluctuationinFXrateandslower-than-expectedRussiantaxrefund;weaker-than-expectedoverseassalesvolumegrowth;slower-than-expecteddomesticnewmodels’volumeramp-upindomesticmarketgivenfiercecompetition.

Exhibit16.GreatWall-Aistradingata

11.8x12-monthforwardPEvsitshistoricalaverageof23.2x

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

Jan-24

Jul-24

Jan-25

Jul-25

Jan-26

Jul-26

100%

80%

60%

40%

20%

0%

-20%-40%

-60%

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0

12MFPEAverageEPSgrowth(RHS)

Source:Bloomberg,HSBCestimates

Exhibit17.GreatWall-Histradingata5.3x12-monthforwardPEvsitshistorical

averageof10.5x

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

Jan-23

Jan-24

Jan-25

Jan-26

70%

50%

30%

10%

-10%-30%-50%

-70%

45.0

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

12MFPEAverageEPSgrowth-RHS

Source:Bloomberg,HSBCestimates

bHSBC

Equities●Automobiles

24July2026

8

GAC

2Q26profitwarningbelowexpectations.GACguidedfora2Q26netlossofRMB3.4bn-3.9bn,belowourexpectations.TheweakerearningswerelargelyduetorawmaterialcostpressureacrossbothitslocalandJVbrands,togetherwithhighersalesandmarketing

expensesrelatedtonewmodellaunches.

Local-brandsalesremainedresilientwhileJVperformancediverged.Itslocal-brandsalesvolumeincreased31%y-o-yin1H26,supportedbyexports(+132%y-o-yto122kunits)and

newmodelsincludingtheAioni60andN60,whichpartiallyoffsetsofterdomesticdemand.WithintheJVbusiness,GACToyotavolumelargelyheldupwith1H26volumeup3%y-o-y,supportedbymodelssuchasbZ3XandbZ7,whileGACHondacontinuedtoseesignificantvolumedeclines(-56%y-o-y)duetoanageingproductportfolio.

Lookinginto2H26,localbrandsmayseeagradualrecovery,butJVweaknessislikelyto

remainthekeyearningsdrag.ThefirstmodelundertheAISTALANDbrand(collaborationwith

Huawei),GT7,starteddeliveriesinJuly,whiletheGX7isscheduledforlaunchlaterthisyear.

Theselaunches,togetherwithcontinuedexportgrowth,shouldprovideincrementalsupportto

local-brandsalesandproductmix.However,weexpectpersistentweaknessintheJVbusiness,particularlyHonda,tocontinueweighingoninvestmentincomeandoverallearnings.

Earningsrevisions.Wedowngradeour2026netprofitforecastfrombreakeventoanetlossofRMB5.9bn,primarilydrivenbythefollowingupdates:

1.Volume:Weincreaseour2026local-brandvolumeestimateto720kunits(fromc650kunits),supportedbyexportexpansionandtheramp-upofAIONandAISTALANDnewmodellaunches.

2.Grossmargin:Wereduceour2026grossmarginforecastto-1.3%(from3.4%),reflectinghighercostinflationfollowingthisyear’srawmaterialpriceincreases.

3.OPEX:Inlightofcontinuedinvestmentinnew-modelmarketingandoverseaschannelexpansion,weraiseourOPEXratioestimateto10.0%(from9.3%).

4.Investmentincome:Wecut2026investmentincomefromJVbrandsby38%,mainlyduetoasignificantvolumecontractionatGACHonda.

Wealsolowerour2027netprofitforecastby79%,primarilyduetolowerinvestmentincomefromJVbrands.Weintroduceour2028forecastsinthisreport.

Exhibit18.Estimatechanges

(RMBm)

New

2026e2027e2028e

Old

2026e2027e2028e

Change

2028e

2026e

2027e

Revenue

113,612

132,731

138,554

93,385

100,383

NA

22%

32%

NA

GrossProfit(incl.D&A)

-1,441

6,011

8,169

3,138

4,664

NA

-146%

29%

NA

GPM(incl.D&A)

-1.3%

4.5%

5.9%

3.4%

4.6%

NA

-4.6ppts

-0.1ppts

NA

OPEXratio

10.0%

9.3%

9.3%

9.3%

9.3%

NA

+0.7ppts

-

NA

Investmentincome

2,489

2,406

2,326

4,002

4,477

NA

-38%

-46%

NA

Netprofit

-5,906

409

1,922

596

1,964

NA

-1091%

-79%

NA

EPS(RMB)

(0.58)

0.04

0.19

0.06

0.19

NA

-1101%

-79%

NA

Source:HSBCestimates

Exhibit19.OurestimatesvsBloombergconsensus

(RMBm)

HSBC

estimate

s

2026e

Consensus2027e

2028e

Di

fference

2026e

2027e

2028e

2026e

___

_______

2027e

2028e

Revenue

113,612

132,731

138,554

108,984

123,373

134,202

4%

8%

3%

Netprofit

-5,906

409

1,922

-1,500

-76

1,947

-294%

638%

-1%

Source:Bloomberg,HSBCestimates

bHSBC

Equities●Automobiles

24July2026

9

MaintainHoldratingswithlowerTPsofRMB5.08andHKD2.13.WecontinuetouseaPB

methodtovaluethecompany,withanewtargetPBmultipleof0.52x(averageoflastone

month12-monthforwardPB;previously0.75x).Applyingthisto2026eBVPSofRMB9.77(from2025e’sRMB10.97),wegetanewtargetpriceforGACAsharesofRMB5.08(fromRMB8.23).

Withanend-2026RMB-HKDFXforecastof1.17(fromend-2025’s1.10),andanupdatedH/A-sharevaluationdiscountof64%(from60%,givenrecentlowerriskappetiteandliquidityintheautoOEMspace),wearriveatanewH-sharetargetpriceofHKD2.13.OurTPsfortheA-andH-sharesimplyc2%/c2%downsidetorespectivecurrentlevels,thuswemaintainHoldratingsonbothshares.

Keyupsiderisks:Better-than-expectedincumbentownedbrandsandJVbrandsvolumepick-upin2H26;stronger-than-expectedAISTALANDnewmodelvolumeramp-up;better-than-

expectedoperatingefficiencyimprovementsfromrestructuring.

Keydownsiderisks:Weaker-than-expectedlocalbrand/JVbrands’volumegrowthand

profitabilitycouldresultinweaker-than-expectedrevenuesandgrossmarginsatthegroup

level;weaker-than-expectedoperatingefficiencyimprovementsfromrestructuring;slower-than-expectedAISTALANDbrandexecutionandvolumerampup.

Exhibit20.GAC-Histradingat0.2x

12-monthforwardPBvsthehistoricalaverageof0.7x

May-15

May-16

May-17

May-18

May-19

May-20

May-21

May-22

May-23

May-24

May-25

May-26

25%20%15%10%5%0%-5%

-10%

12MFPBAverageROE(RHS)

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Source:Bloomberg,HSBCestimates

Exhibit21.GAC-Aistradingat0.5x

12-monthforwardPBvsthehistoricalaverageof1.5x

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

Jan-24

Jul-24

Jan-25

Jul-25

Jan-26

Jul-26

25%

20%

15%

10%

5%

0%

-5%

-10%

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

12MFPBAverageROE(RHS)

Source:Bloomberg,HSBCestimates

BAIC

BeijingBenzundermaterialpressurein1H26.AsthecoresubsidiaryofBAIC,BeijingBenz,reportedanc31%y-o-ydeclineinsales,drivenbyintensifiedcompetitionfromawaveofChinapremiumEVlaunches(eg,Zeekr9X,NIOES8/ES9,XPengGX,etc)alongsidesubdued

domesticconsumerdemand.Despitechannelpricecutsandpromotions–reflectedina11%q-o-qand20%y-o-yreductioninthegroup’sASPin1Q26–thevolumedeclinepersisted.AsBeijingBenzremainsthegroup’sprimarycontributortorevenueandearnings,thecontractionhadadirectandsignificantimpactonoverallprofitability.

BeijinglocalbrandsandJVbrandHyundaiwerecomparativelyresilient.BeijingHyundai

1H26salesweredown5%y-o-y,materiallybetterthanthebroaderindustrytrend.Thisstabilitywassupportedbytwofactors:(1)meaningfuldealerdiscountsthatsustainedbaselinedemandforpetrolvehiclesintheRMB100,000–150,000segment;and(2)strongexportmomentum,withroughly43kunitsshippedoverseasin1H26,helpingtooffsetweakerdomesticretailsales.In

addition,BAIC’sownbrand(notablytheBJ30off-roadmodel)maintainedsteadydemandintheirniches,providingincrementalsupporttogroup