CMBI's Sales Forecast: CMBI maintains a forecast for a 0.1% YoY decline in retail sales and a 2.9% YoY increase in wholesale sales of passenger vehicles in China, influenced by disappointing sales data from late last year.

New Energy Vehicles Adjustments: The growth forecast for new energy vehicles has been revised down to 12.6% for retail and 15.1% for wholesale sales due to stricter trade-in subsidy requirements.

Earnings Forecast Changes: CMBI has lowered its 4Q25 earnings forecasts for several automakers, including GWMOTOR, XPENG-W, LEAPMOTOR, and GAC GROUP, due to poor sales performance.

Positive Outlook for BYD and Others: Conversely, CMBI raised earnings forecasts for BYD, NIO, and LI AUTO, while maintaining its forecasts for GEELY AUTO, which it selected as a top pick with a Buy rating and a target price of HKD25.

NIO's Q4 Performance: CEO William Li announced that NIO is expected to deliver 40,000 units of the new ES8 in Q4, achieving solid gross margins and aiming to meet profit targets for the quarter.

Growth Strategy: Li outlined a medium-to-long-term plan for NIO to maintain an annual sales growth rate of 40-50% over the next three to five years.

NIO's Q4 Performance: CEO William Li announced that NIO is expected to deliver 40,000 units of the new ES8 in Q4, achieving solid gross margins and helping to meet profit targets.

Growth Strategy: Li outlined a medium-to-long-term plan for NIO to maintain an annual sales growth rate of 40-50% over the next three to five years.

Stock Performance of Chinese OEMs: Chinese OEMs have seen a 1% decline in stock performance year-to-date, contrasting with a 6% increase in the MSCI China Index, primarily due to weak auto sales in the first quarter of 2026.

Impact of Government Policies: Despite updates to the automotive trade subsidy policy, passenger car demand remains pressured by factors like weak consumer confidence and a cautious buyer attitude, as noted by JPMorgan.

Shift in Competitive Landscape: The competitive environment in China's automotive industry is expected to transition from price wars to value creation, favoring companies that excel in autonomous driving, AI, cost control, and international expansion.

Investment Recommendations: JPMorgan forecasts a potential bottoming out for certain OEMs in Q2 2026 and suggests investors consider XPENG and NIO for potential gains, while remaining cautious about LI AUTO.

EU-China Tariff Agreement: The European Union has reached a consensus with China regarding tariffs on electric vehicles, requiring Chinese exporters to submit price commitment letters before entering the EU market.

Auto Stocks Performance: Following the tariff announcement, several Chinese carmakers, including BYD, CHERY, and GEELY, saw significant stock price increases, with BYD rising by nearly 4% and other brands also experiencing gains.