China Galaxy Securities (CGS) released a research report stating that the automotive sector delivered strong performance in 2025, with passenger vehicles, commercial vehicles, auto parts, and motorcycles all showing upward trends. In Q1 2026, sector performance came under pressure due to factors including the industry's off-season and exchange rate fluctuations. Looking ahead to Q2 2026, the Beijing Auto Show will feature numerous flagship new models, bringing new supply to the market. Coupled with a recovery in market sales following the Q1 off-season, the sector's performance and market sentiment are expected to recover. The report recommends leading passenger vehicle companies in a strong new model cycle, as well as the intelligent vehicle and humanoid robot industry chains. The main views of China Galaxy Securities are as follows:
In 2025, the ZX automotive sector achieved total operating revenue of 4.06 trillion yuan, a year-on-year increase of 9.3%, and non-GAAP net profit attributable to shareholders of 118.103 billion yuan, a year-on-year increase of 20.3%. In Q1 2026, the ZX automotive sector achieved total operating revenue of 877.187 billion yuan, a year-on-year increase of 4.2%, and non-GAAP net profit attributable to shareholders of 24.634 billion yuan, a year-on-year decrease of 18.4%. Breaking it down by segment:
The passenger vehicle segment achieved operating revenue of 2.19 trillion yuan in 2025, a year-on-year increase of 5.1%. Revenue growth was primarily driven by sales increases from automakers such as SAIC, BYD, Great Wall Motor, Seres, and BAIC Group. It achieved non-GAAP net profit attributable to shareholders of 33.486 billion yuan, with SAIC contributing the main increment, while profits at Great Wall Motor and GAC Group declined significantly. In Q1 2026, it achieved operating revenue of 430.214 billion yuan, a year-on-year decrease of 1.8%, mainly affected by the industry off-season, with Seres, Great Wall Motor, and JAC Motors contributing increments. It achieved non-GAAP net profit attributable to shareholders of 4.728 billion yuan, a year-on-year decrease of 58.9%. The industry off-season, combined with exchange rate fluctuations weakening export market profitability, put pressure on segment profits.
The commercial vehicle segment achieved operating revenue of 591.262 billion yuan in 2025, a year-on-year increase of 10.3%, with Weichai Power, Foton Motor, Sinotruk, Yutong Bus, and FAW Jiefang contributing the main increments. It achieved non-GAAP net profit attributable to shareholders of 19.907 billion yuan, a year-on-year increase of 14.5%, with Yutong Bus, Foton Motor, Hualing Xingma, and FAW Jiefang contributing the main increments. In Q1 2026, it achieved operating revenue of 154.993 billion yuan, a year-on-year increase of 14.2%, and non-GAAP net profit attributable to shareholders of 5.623 billion yuan, a year-on-year increase of 28.8%, as industry prosperity continued and profitability further improved.
The auto parts segment achieved operating revenue of 1.14 trillion yuan in 2025, a year-on-year increase of 18.3%, with leading companies in various sub-sectors such as Huayu Automotive Systems, Fuyao Glass, Joyson Electronic, Desay SV Automotive, Tuopu Group, Xinquan Automotive Trim, Bethel Automotive Safety Systems, Xingyu Automotive Lighting, and Baolong Automotive contributing core increments. It achieved non-GAAP net profit attributable to shareholders of 58.301 billion yuan, a year-on-year increase of 44.3%, with profitability significantly enhanced due to improved economies of scale. In Q1 2026, it achieved operating revenue of 260.192 billion yuan, a year-on-year increase of 10.8%, achieving steady growth despite the industry off-season, driven by the new model cycle of domestic brands leading to revenue growth for industry leaders such as Jifeng Auto Parts, Tuopu Group, Yinlun Co., Ltd., Huayang Group, Fuyao Glass, Xingyu Automotive Lighting, and Baolong Automotive. It achieved non-GAAP net profit attributable to shareholders of 12.896 billion yuan, a year-on-year increase of 3.9%, affected by exchange rate fluctuations, reduced industry scale effects, and customer annual price reductions.
The motorcycles and other segment achieved operating revenue of 97.198 billion yuan in 2025, a year-on-year increase of 19.7%, and non-GAAP net profit attributable to shareholders of 6.091 billion yuan, a year-on-year increase of 11.3%, benefiting from strong exports and high demand for electric two-wheelers, with CFMOTO, AIMA Technology, Loncin Motor, and Taotao Vehicles contributing the main increments. In Q1 2026, it achieved operating revenue of 22.603 billion yuan, a year-on-year increase of 2.3%, as export prosperity continued, but the electric two-wheeler market entering its off-season dragged on revenue growth, with CFMOTO and Taotao Vehicles contributing the main increments. It achieved non-GAAP net profit attributable to shareholders of 1.215 billion yuan, a year-on-year decrease of 30.7%, as AIMA Technology's profitability came under pressure from the industry off-season and rising raw material costs.
Looking ahead to Q2 2026, the Beijing Auto Show at the end of April will feature nearly 180 new models completing their debut/pre-sale/launch, such as the BYD Sea Lion 08, BYD Seal 08, BYD Tang, Fang Cheng Bao S Series, Denza Z, Geely Galaxy M7, Geely Xingyao 7, new Zeekr 009, Volkswagen ID.ERA 9X, Volkswagen ID.7, Hyper S600, AION N60 Huajing S, Li L9 Livis, IM LS8, Wey V9X, Exeed EX9, Xpeng GX, Nio ES9, Wenjie V9, Qiyuan GT7, Yijie X9, and the new BMW iX3. These numerous flagship new models will bring new supply to the auto market. Coupled with the market's recovery from the traditional off-season after Q1, auto sales are expected to recover, which is likely to drive a rebound in sector performance and market sentiment from the Q1 levels.
Review of the past two weeks: Over the last two weeks, the Shanghai Composite Index, Shenzhen Component Index, and CSI 300 Index changed by +2.45%, +4.17%, and +2.15%, respectively. The automotive sector changed by +3.97%, ranking 13th among the 30 ZX industries. By sub-sector, components, commercial vehicles, sales & services, passenger vehicles, and motorcycles & others changed by +5.73%, +5.06%, +4.35%, +1.21%, and -2.16%, respectively, over the two weeks. Valuation-wise, the P/E ratios for sales & services, components, motorcycles & others, passenger vehicles, and commercial vehicles are 33.23x, 30.80x, 27.86x, 25.23x, and 21.35x, respectively. The P/B ratios for motorcycles & others, components, commercial vehicles, passenger vehicles, and sales & services are 3.51x, 3.16x, 2.47x, 1.89x, and 1.47x, respectively.
Risk warnings: 1. Risk of auto sales falling short of expectations. 2. Risk of policy effects falling short of expectations. 3. Risk of intensifying industry competition. 4. Risk of humanoid robot mass production falling short of expectations.
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