China Auto Industry Profits Hit Five-Year Low in H1 2026 as NEV Sales Rise Amid Market Pressure

From January to May 2026, China's auto industry reported a profit of RMB 144 billion, with a profit margin of 3.4%, significantly lower than the 6.1% average for downstream industrial sectors during the same period. Within this, the vehicle manufacturing segment posted a mere profit margin of 1.5%—translating to a net profit of approximately RMB 3,000 per newly sold vehicle priced at RMB 200,000. According to data from the National Bureau of Statistics, the textile industry recorded an operating revenue profit margin of 3.6% over the same period, surpassing that of the auto sector. In the first half of 2026, domestic auto sales totaled 9.921 million units, down 21.1% year-on-year; passenger vehicle retail sales reached 8.701 million units, a 20.2% decline compared to the same period last year. Specifically, new energy passenger vehicle retail sales fell by 14% year-on-year, while internal combustion engine (ICE) passenger vehicle sales dropped by 26.4%. Multiple listed automakers have issued preliminary earnings forecasts for the first half of the year, indicating losses. GAC Group expects a loss of RMB 4.06–4.57 billion, BAIC BluePark anticipates a loss of RMB 1.77–1.97 billion, Seres forecasts a loss of RMB 1.5–1.8 billion, and JAC Motors projects a loss of approximately RMB 740 million—marking its seventh consecutive quarterly loss. Great Wall Motor expects attributable net profit to range between RMB 2.35–2.6 billion, representing a year-on-year decline of 58.97% to 62.92%. As of July 16, 13 listed automakers had released earnings guidance, with six forecasting losses. Cost-side pressures have risen sharply. Spot prices for battery-grade lithium carbonate surged significantly, while prices for automotive-grade memory chips jumped by 180%, with some high-end models seeing increases exceeding 300%. The memory cost per vehicle for highly intelligent models has soared from approximately USD 820 to around USD 5,100. Copper prices have also risen by roughly 30% year-on-year. According to executives from several automakers, the combined price hikes in memory chips and lithium carbonate have increased the average per-vehicle cost by over RMB 10,000.