BOCOM INTL noted that China's passenger vehicle retail market showed weakness in February, influenced by the recovery period following the adjustment of new energy vehicle tax subsidies for 2026 and the impact of the Spring Festival holiday. Retail sales for the month were 1.034 million units, a year-on-year decrease of 25.4% and a month-on-month decline of 33.1%. The penetration rate of new energy vehicles rebounded month-on-month to 44.9% in February. Exports continued their strong momentum, with new energy vehicles accounting for nearly 50% of total exports.
The institution indicated that due to seasonal fluctuations and the effects of earlier consumption overdrafts, the overall performance of the mainland Chinese auto market in the first quarter of 2026 remained stable. With the accelerated implementation of local consumption stimulus policies, coupled with the Beijing Auto Show in April and the launch of multiple new models, market sentiment is expected to gradually recover.
Regarding exports, benefiting from positive progress in tariff negotiations between China and Europe as well as China and Canada, and the deepening of global strategies by domestic brands, China's new energy vehicle exports are accelerating their transition from "product export" to "supply chain export."
On individual stocks, it is recommended to focus on: XPeng (09868/XPEV US/Buy), as the rollout of VLA2.0 commences and overseas localized production gradually materializes, driving volume and gross margin improvements; Geely Auto (00175/Buy), which is promoting internal resource integration following the privatization of Zeekr; and BYD (01211/Buy), as the release of its second-generation Blade Battery and flash-charging technology may positively impact sales, while overseas capacity enters a volume expansion phase, potentially further optimizing its profit structure.
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