Auto Stocks Slide on May Sales Decline

On June 17, Hong Kong-listed auto stocks broadly declined, with Seres falling by 4%, XPeng Inc. and Geely Automobile down nearly 3%, and Chery Automobile, BYD Company, and Li Auto all dropping more than 2%. BAIC Motor, Great Wall Motor, and NIO also followed the downward trend. Data released by China’s National Bureau of Statistics on June 16 showed that retail sales of automobiles in May fell 16.1% year-on-year, with a cumulative decline of 11.8% from January to May. Intense competition in China’s auto market has made “adding features while cutting prices” the new norm, continuously squeezing automakers’ profit margins. Following the new energy passenger vehicle (NEV) penetration rate surpassing 60%, overall industry growth has markedly slowed, prompting several international investment banks to recently lower their target prices for multiple automakers.