Chery Automobile’s Hong Kong Listing: Threefold Challenge of Electrification, Premiumization, and Profitability

On September 25, Chery Automobile officially debuted on the Hong Kong Stock Exchange, representing the largest automotive IPO in the city this year. Despite opening capital markets at HK$34.20 per share—an 11.22% premium to its offering price and briefly valuing the company above HK$200 billion—Chery faces persistent structural headwinds, including subpar gross margins, a slow advance into new energy vehicles, and a heavy reliance on internal combustion models. The company also contends with declining sales of its premium marques and limited scope for price premiums.

Having endured multiple unsuccessful listing attempts since its first IPO bid in 2004, Chery resolved its complex ownership structure in January 2025 when Chery Holdings simplified shareholdings through a shareholder consolidation. This corporate housekeeping cleared the path for listing, and the strong revenue trajectory that followed bolstered investor confidence. From RMB 92.618 billion in 2022, Chery’s revenues surged to RMB 269.897 billion in 2024—a compound annual growth rate of 70.7%—and reached RMB 68.223 billion in Q1 2025, up 24.25% year-on-year.

Yet these top-line gains have not translated into comparable profitability. Chery’s gross margin slid from 13.8% in 2022 to 13.5% in 2024, falling further to 12.4% in the first quarter of 2025. In contrast, BYD’s margin rose from 17% to 20.1% over the same period, while Great Wall and Geely posted Q1 2025 margins of 17.84% and 15.8%, respectively. Coupled with an asset-liability ratio of 87.7% as of Q1 2025—well above industry norms—Chery’s balance sheet carries notable leverage risk.

Fuel-powered vehicles remain Chery’s dominant revenue engine. In 2022 through 2024, combustion models accounted for 75.9%, 87.8%, and 69.6% of total sales, respectively, and still represented 69.7% of passenger-vehicle revenue in Q1 2025. By contrast, new energy vehicles comprised only 30.3%. As the China Passenger Car Association forecasts a 56% wholesale penetration for electrified models in 2025, Chery’s early entry into smart connectivity in 2010—spanning cockpit intelligence, autonomous driving, and robotics—has yielded only modest market share. Its micro-EVs Little Ant (2017) and QQ Ice Cream (2021) were pioneers in the A00 segment, but that market’s growth slowed to 21.5% in 2022, well below the 174.8% and 109.4% expansions for the A0 and A classes.

Chery responded in 2022 by rolling out its Yaoguang 2025 Strategy, defining four core platforms—Mars Architecture, Kunpeng Power, Lion Technology, and Galaxy Ecosystem—to accelerate electrification and digitalization. In 2024, the company sold 583,600 new energy vehicles, a 232.7% increase, yet far trailed BYD’s four million units, SAIC’s 1.2341 million, and Geely’s 888,200.

Efforts to establish a premium foothold have yielded limited success. Exeed, Chery’s upscale division, delivered 7,659 vehicles in August—a 32.45% decline year on year—and has sold 77,149 units through August, down 3.84%. Sales of its Star Era series totaled just 115 units in August. Zhijie, the smart-electric brand developed with Huawei, managed 1,702 deliveries in the same month, overshadowed by AITO’s 40,000 sales.

Analysts caution that Chery’s longstanding low-price positioning has locked in a value-for-money image, hindering premium advancement and compressing margins. Gao Zhengyang of Suzhou Commercial Bank notes that price-driven customer segments lack loyalty and are easily drawn away by competitors, constraining R&D budgets and limiting product differentiation. Economist Pan Helin, a member of the Ministry of Industry and Information Technology’s expert committee, adds that a crowded, homogeneous market at similar price points intensifies competition, raising the risk of attrition for lower-tier players.

With the IPO proceeds, Chery must bolster R&D investment in electrification and intelligent systems to rebalance its business mix. By upgrading core technologies, refining brand positioning, and delivering differentiated products, the company can seek to transform perceptions, establish pricing power, and unlock sustainable profitability.