Lyon: Auto sales in China increased 5% month-on-month in October, preferred BYD shares (01211), Geely (00175), and Zero Sports (09863)

The Zhitong Finance App learned that Lyon released a research report saying that the sales volume of major Chinese car companies increased 5% month-on-month and 4% year-on-year in October, and the “Silver Ten” recovery in seasonal domestic demand offset weak exports. The bank believes that the slowdown in exports is a high-level consolidation, not a trend reversal; EU tariffs are still the key catalyst for the fourth quarter. Domestic demand growth momentum is shifting to car companies with a new model cycle. The sector favors BYD shares (01211), Geely (00175), and Zero Sports (09863). The bank maintained the “Highly Confident Outperform” ratings of BYD's H Shares and Geely Automobile, with target prices of HK$109 and HK$18 respectively; it maintained Zero Sports's “outperforming the market” rating, with a target price of HK$61.

Domestic sales of the four major car companies are picking up, and export growth has slowed

Lyon pointed out that domestic sales of the four major exporters, BYD, Geely, Chery (09973) and Great Wall Motor (02333), increased 12% month-on-month in October. On a year-on-year basis, domestic sales of these car companies fell 22% due to the high base, while exports increased 77%.

Among them, BYD exported 172,200 vehicles in October; Geely's exports remained flat at 107,200 units, exceeding 100,000 units for the fifth month in a row, with electric vehicles accounting for 77% of the sales mix; and Great Wall Motor's exports increased 5% month-on-month to 62,900 units, accounting for 52% of total shipments. The bank anticipates that overseas sales will continue to be an important growth driver until 2027.

Domestic demand performance is divided, and the new model cycle has become a key driving force

In terms of domestic sales, BYD's passenger car sales reached 483,300 units in October, up 11% year on year and 6% month on month, of which domestic sales increased 13% month-on-month to 312,900 units. Geely's sales reached a record high of 310,200 units during the year, up 1% year on year and 6% month on month, and the share of electric vehicle sales rose to 69%.

The performance of new car builders is divided. Zero Sports delivered 1061,000 vehicles in October, an increase of 51% year over year, and remained flat, exceeding 100,000 units for the fourth month in a row. The B10 began local production in Spain in mid-October. Xiaopeng Motors (09868) delivered a record, reaching 50,200 vehicles, up 20% year on year and 22% month on month. Overseas deliveries also set a record, reaching 13,300 units; Xiaomi Group-W (01810) delivered more than 50,000 vehicles. Sales of Ideal Auto (02015) and QQ declined respectively.

Lyon believes that as domestic demand recovers seasonally, car companies with a new model cycle will benefit even more, and after the export market is consolidated at a high level, it is expected that it will continue to be an important source of growth for Chinese car companies.