Lyon: China's automobile industry is in transition, domestic sales and export uncertainty drive sector fluctuations, and BYD, Geely and Zero Run are preferred

The Zhitong Finance App learned that Lyon released a research report saying that car sales of major Chinese brands rose 5% month-on-month in September. Traditional peak season performance fell short of expectations, and export growth from leading exporters also slowed, as overseas product portfolios stabilized and the pace of expanding new markets normalized. The bank believes that the weak domestic demand background and exports may increase the recent sector's volatility in the overall market, but the core export argument is still valid and is expected to receive further support after export tax rebates in the fourth quarter and the clarity of the EU tariff policy is improved; on the mainland, demand is expected to continue to be concentrated on leading automakers, even when the peak season is weak. The bank chose BYD shares (01211), Geely Auto (00175), and Zero Sports (09863), and gave BYD and Geely a “Highly Confident Outperform” rating and Zero Run's “Outperform the Market” rating. The target prices were HK$120, HK$30 and HK$60, respectively.

The bank pointed out that car deliveries from major brands increased 5% month-on-month and 8% year-on-year in September, supported by mainland and overseas electric vehicle demand; mainland demand also appears to be concentrated on leading automakers. Among them, exports of Great Wall Motor (02333) recorded the first month-on-month decline in 2026 in September. The exports of BYD, Geely and Great Wall Motor accounted for 40%, 37% and 52% of passenger car sales, respectively. The bank sees this as a period of high growth normalization rather than a reversal of the export story, and expects overseas sales to continue to grow year-on-year in 2027, which will continue to be an important contribution.

The bank also pointed out that Europe has become an increasingly important overseas profit pool for Chinese automakers, yet the tariff framework is still uncertain; the EU's current countervailing duties mainly target Chinese-made pure electric vehicles, hybrids and fuel vehicles, which are currently not within the scope, helping the export mix to quickly switch to hybrids, but if restrictions are extended to hybrids, it is still a major downside risk. Regardless of the results, localized production in Europe is becoming more and more important, and the industry is gradually moving from pure product exports to a more localized overseas model.

In terms of individual stocks, BYD sold 456,700 passenger cars in September, up 16% year-on-year and 5% month-on-month. Orders for second-generation flash charging models are expected to be in hand for about 2.5 months; Geely delivered 292,200 passenger cars last month, up 7% year-on-year and 8% month-on-month, with electric vehicles accounting for 65% of the total. Zero Run sold 105,600 vehicles in September, a year-on-year increase of 59% and a month-on-month increase of about 2%; it was given a “outperforming the market” rating, and the target price was HK$60. Xiaopeng Group-W (09868) sold 41,200 vehicles in September, down 1% year-on-year and 5% month-on-month.