July Sales in the Automotive Industry: Mixed Blessings, Surge in Domestic Brands Going Abroad

Entering August, major car brands have successively announced their sales figures for July. Overall, the growth compared to June has been relatively weak, but some brands have shown strong performance, achieving significant growth against the trend and maintaining their positions as market leaders. In July, the automotive industry landscape remained fundamentally stable, with leading players established in both traditional manufacturers and new automotive forces. BYD Company Limited (01211) led the industry with sales of 419,200 units, while Leap Motor (09863) continued to top the list of new forces with sales of 101,300 units. Leap Motor became the first domestic new force to sell over 100,000 units in a month, significantly widening the gap with other new forces. In fact, the car market in July was in a traditional off-season, and the frequent occurrence of natural disasters, such as typhoons, suppressed offline foot traffic and car purchase demand, resulting in unsatisfactory inventory levels. According to the China Association of Automobile Manufacturers, the automotive dealers' inventory warning index is at 61.1%, up 3.9 percentage points year-on-year and month-on-month, remaining above the threshold. Competition at the pricing level remains fierce, with 37.3% of dealers making significant price cuts in July, putting continued pressure on terminal profit margins. Currently, the penetration rate of domestic new energy vehicles has approached 60%, limiting the growth potential of replacing existing vehicles in the market. Expanding overseas has become a new battleground for major automotive companies, and with low overseas penetration, many exporting companies have recorded impressive growth. Furthermore, many manufacturers have also invested in humanoid Siasun Robot & Automation projects, trying to create new growth points as the industry enters the final round of elimination. Which car company will ultimately emerge victorious? Leaders Remain Strong; Leap Motor's Monthly Sales Break 100,000 for the First Time From the sales figures in July, the results are mixed, but the trend of the strong growing stronger has further solidified. Among traditional car manufacturers, the top five are BYD Company Limited, SAIC, Chery, Geely, and Changan, with sales of 419,200, 338,600, 261,900, 250,200, and 207,100 units respectively. Chery saw its sales rise by 24.1%, with all five of its brands achieving growth, particularly the Zhijie brand which surged by 227.7%. In the first seven months, domestic brands represented by Chery and Geely achieved counter-trend sales growth of 1.537 million and 1.673 million units, reflecting year-on-year increases of 10.3% and 2%, respectively. Additionally, domestic brands have shown strong performance internationally, with Chery exporting 202,500 units and 1.1464 million units in July and the first seven months, up 70.1% and 71.2% year-on-year, respectively. Geelys exports stood at 107,000 units and 580,900 units, reflecting increases of 202% and 165% year-on-year, while BYD Company Limited exported 180,500 units and 972,800 units, marking increases of 123.6% and 78.5% year-on-year. In comparison, SAIC, as an old leader, has performed unsatisfactorily, but domestic brands have maintained high growth; export trends align with those of domestic brands, primarily dragged down by joint venture brands. In the first seven months, SAIC Volkswagen and SAIC GM saw sales decline by 32.7% and 7.45%, respectively, and joint venture brands like Toyota and Honda also experienced declining trends. The rise of domestic brands is closely tied to the strategic promotion of new energy vehicles, while the entry of new automotive forces has brought prosperity to the industry. In the realm of new automotive forces, significant differentiation exists. In July, Leap Motor sold 101,300 units, not only maintaining an absolute leading position but also achieving growth of 102%, far exceeding other new forces, marking it as the first new force to break the 100,000 monthly sales mark. XPENG ranked second but showed relatively weak growth. NIO is now reaping rewards, as its brands, Ladao and Firefly, began to ramp up production, reporting a sales increase of 71%, ranking second after Leap Motor in the first seven months. Li Auto has shown some weakness, with sales decreasing both year-on-year and month-on-month during the month. Meanwhile, Xiaomi has maintained stable performance, with monthly sales of over 30,000 units for its two models. The situation of the strong becoming stronger is largely locked in, and it will be challenging to turn this trend around in the short term. On one hand, in a highly competitive environment, brands with higher sales achieve greater market recognition, while those with lower sales become less appealing to consumers due to fears of elimination, thus leading to a siphoning effect favoring higher-selling brands. On the other hand, competition among leading brands is not merely about price but focuses on overall strengths such as product capability, market reach, and business development potential. In the final phase, the contest of comprehensive strength may see the sector re-entering an upward trajectory. A closer examination of the successful leading automotive companies reveals that they share common characteristics, continuously advancing both in product development and market performance, while price wars are not the primary strategy, exemplified by BYD Company Limited and Leap Motor. For BYD Company Limited, its five major passenger vehicle brands cover user needs across different price ranges, with the Dynasty and Ocean series focusing on the mass market, while the Fangcheng Leopard and Tengshi target the personalized and mid-to-high-end markets, and the Yang Wang series entering the luxury segment. In-house developed technologies create competitive barriers, such as electrification and platform technologies, enabling pure electric models to quickly charge from 10% to 70% in just five minutes, and the second-generation blade battery switch acceleration is expected to be completed for all models by the end of 2026; the Tian Shen Eye technology covers all models, keeping intelligent driving capabilities at the industry forefront. On the market side, exports have become the second growth curve, with July exports reaching 180,500 units, a new high, accounting for 43% of total sales, becoming a core driver expected to reach 1.8 to 1.9 million overseas sales for the year, marking a year-on-year increase of 75%. The Brazilian market stands out as one of the company's most notable overseas markets, with the first phase of the Brazilian production facility designed for an annual output of 150,000 units and a long-term plan for an annual output of 600,000 units. In the first half of this year, the company achieved nearly 100,000 sales in the Brazilian market, a year-on-year increase of 107%. In contrast, Leap Motor has created blockbuster models targeting segmented demographics. The company's main models in the C and B series are both SUVs, primarily aimed at younger consumers, with a concentrated price range focusing on the 100,000 to 200,000 yuan market, and each model sells well upon launch. The first MPV in the D series has raised the price range to 200,000 to 300,000 yuan, but offers more configurations compared to products in the same price range, truly achieving "good quality at a reasonable price." Through the "blockbuster model" strategy, Leap Motor has followed a different successful path from BYD Company Limited, breaking the 100,000 monthly sales mark for the first time in July, allowing it to compete on the same level as traditional brands. Notably, Leap Motor's business has expanded to more than 40 countries and regions globally, with over 2,000 global channel outlets, nearly 1,000 of which are overseas. Its export volume has kept it at the top of the monthly sales rankings, with total overseas exports nearing 100,000 units in the first half of this year, surpassing the total for the previous year. The successes of BYD Company Limited and Leap Motor provide valuable lessons for their peers; Leap Motor's smaller scale leverages a deep collaborative model with international multinational automotive firms, actively engaging in localization strategies to jointly explore the market. XPENG is also advancing this model in cooperation with Volkswagen, with its sales network covering 65 countries and regions and over 1,200 stores; according to He Xiaopeng, its cumulative overseas sales have reached 100,000 units. Additionally, while making strides in overseas markets, major automotive companies are also seeking new growth supports, such as leveraging R&D and manufacturing strengths to collaborate with third-party platforms, expanding the applications of intelligent driving scenarios beyond private vehicles to areas like unmanned taxis, while continuing to promote the research and application of humanoid Siasun Robot & Automation. Bodily intelligence has the potential to reshape the automotive industry chain, but it currently appears that the commercialization of this business remains in its early stages, with weaker prospects for contribution. In summary, July's industry sales results were mixed, with both traditional and new forces maintaining strength at the top. Additionally, domestic brands surged overseas, and with low penetration rates for new energy vehicles abroad, coupled with the urgency for new energy automotive development due to the U.S.-Iran conflict, domestic brands have been presented with significant market opportunities. The successes of BYD Company Limited and Leap Motor, through their distinct paths, may serve as models for the growth of domestic brands. After a year of deep corrections in the Hong Kong auto sector, the impacts of the industry's slow growth have largely been realized. During this period, several companies have maintained market confidence through buybacks and other means; for instance, Geely has repurchased a total of 108 million shares this year, Li Auto has repurchased 44 million shares, Xiaomi has repurchased 368 million shares, and Leap Motor has seen continuous buybacks from founder Zhu Jiangming and management. Since the end of June this year, the automotive sector has begun to rebound from the bottom, with an increase of over 20%, although the industry's slow growth continues to suppress valuation increases. However, high growth in overseas markets and the emergence of new growth points, coupled with a recent deep correction that has led to some stocks being "halved" in value, have created opportunities for the market to find "bargain" high-quality targets, with the sector possibly re-entering an upward channel and leading companies expected to attract institutional favor.