Rising volume and prices, leading the market against the trend—Geely Auto is redefining the 'champion DNA' of Chinese automakers

China's auto market underwent a deep adjustment in the first half of 2026. $GEELY AUTO (00175.HK)$$Geely Automobile Holdings (GELHY.US)$

According to data from the China Passenger Car Association (CPCA), domestic passenger vehicle retail sales totaled 8.701 million units in the first half, down 20.2% year-over-year. In June alone, narrow-definition passenger vehicle retail sales reached 1.602 million units, a 23.2% year-over-year decline—marking the weakest June performance compared to the same month over the past four years.

Meanwhile, the industry-wide price war continues unabated after several years. According to the latest data, the automotive sector’s profit margin stood at just 3.4% from January to May 2026, repeatedly squeezed as automakers are forced to choose between sales volume and profitability.

Industry-wide anxiety has spilled over into capital markets, with the auto sector broadly declining in the first half of the year—most A+H share auto stocks posted falling share prices.

Investors are all asking the same question: Who can withstand volatility in this industry cycle?

More sales equals more profits? Geely Auto is returning to a virtuous cycle in the automotive business.

Observing automakers’ performance, I took note of Geely Auto.

According to CPCA data, Geely Auto achieved domestic retail sales of 1.021 million units in the first half of the year, making it China’s top-selling passenger vehicle brand domestically in H1 2026—and the only Chinese independent brand to surpass one million units in sales.

Its overseas performance was equally impressive: June export sales exceeded 100,000 units for the first time, and cumulative export sales in the first half surpassed 474,228 units—a staggering 158% year-over-year increase, already exceeding its full-year 2025 export volume and marking it as the fastest-growing Chinese independent brand in overseas sales during the period.

Among Chinese domestic automakers that have set annual sales targets (Chery Group, Changan Automobile, and Great Wall Motor), Geely Auto has set the highest target and, as of the first half of this year, leads the group in target achievement rate.

More notably, domestic automakers often boost sales through 'trading price for volume,' implying that scale growth inevitably comes at the expense of profitability. However, Geely has broken this stereotype early in the current industry cycle.

According to its Q1 financial results this year, Geely reported a 15% year-over-year increase in revenue and a 31% rise in core net profit attributable to shareholders. Core net profit per vehicle reached RMB 6,429, up 30% year-over-year—the highest for the same period in the past five years—and gross margin stood at 17.5%, an increase of 1.8 percentage points year-over-year.

The following two comparisons illustrate Geely’s 'simultaneous growth in volume and price' strategy: First, revenue growth outpaced sales volume growth, indicating an increase in average selling price per vehicle. Second, profit growth exceeded revenue growth, reflecting continuously improving profitability.

Traditionally, economies of scale have been regarded as an ironclad rule in the auto industry: higher sales volumes lower fixed costs per unit and thereby boost profits. However, this rule has been disrupted in the current price-war environment. When pricing becomes the primary competitive lever, cost advantages from scale expansion are entirely offset by price cuts—even resulting in greater losses the more vehicles sold.

Therefore, Geely’s 'simultaneous growth in volume and price' directly demonstrates that it achieves genuine economies of scale—not through price wars—but by optimizing its product mix and enhancing brand value to drive profit growth.

Looking back at the first half of the year, Geely has been consistently launching high-value products across all segments—from entry-level and family-oriented models to mid-to-high-end vehicles priced above RMB 200,000 and luxury models exceeding RMB 400,000. When consumers purchase not just for affordability but for perceived value, it signals strong recognition of Geely’s offerings and underscores its ability to withstand cyclical industry volatility. This value-driven approach has opened significant upside potential for Geely’s growth trajectory.

Synergies under 'One Geely': Value-driven momentum propelling the entire brand portfolio upward

A deeper look into Geely’s brand portfolio clearly reflects this value-driven growth model.

1. Zeekr: Leading the sustained upward trajectory of premium automotive value in China

Premiumization has long been the most frequently touted yet hardest-to-achieve goal for Chinese domestic brands. Over the past decade, spanning from the internal combustion engine era to the new energy vehicle era, domestic automakers have tried various approaches to break into the premium market, but only a handful of models have truly established themselves in the price segment above RMB 300,000.

The core issue does not lie in specifications. Compared with traditional luxury brands’ models at similar price points, domestic brands—leveraging mature and reliable component supply chains—have already achieved 'offering what others lack, and surpassing others where they compete' across many mainstream features. The real barrier lies in the unique product strength derived from an integrated technological ecosystem and the ability to build brand value.

Zeekr has delivered a solid answer. In June, it delivered 35,169 vehicles, up 111% year-over-year; its cumulative deliveries for the first half reached 178,370 units, a 97% year-over-year increase. Its average selling price is close to RMB 350,000, already surpassing traditional luxury brands like BMW, Mercedes-Benz, and Audi (BBA). Among them, the Zeekr 9X has become a bestseller in the premium luxury segment, with an average transaction price exceeding RMB 530,000—accounting for one out of every three luxury vehicles sold above RMB 500,000.

Zeekr’s differentiated technological ecosystem serves as a deep moat for the 9X. First, its chassis and handling performance stem from Zeekr’s long-term accumulation of technology and expertise, making it difficult to replicate. Additionally, systems like the SEA Safety Armor, SEA-S Super Hybrid Architecture, and Qianli SEA intelligent driving assistance collectively form a comprehensive framework driven by safety, performance, and intelligence—enabling Zeekr to avoid product homogenization and establish distinctive brand influence in the market.

With high-end products like the 9 Series and 8 Series ramping up volume, Zeekr’s brand value will continue to rise, steadily enhancing Geely’s profit margins over the long term.

II. Geely Galaxy: Delivering High-Value Products in the Mainstream Volume Market

The Galaxy brand has demonstrated remarkable resilience. From January to May, while mainstream brands in the same price segment generally saw declining sales, Galaxy’s market share increased by 0.43 percentage points year-over-year to 8.49%, further narrowing the gap with the market leader. In June, Galaxy returned to month-over-month growth, delivering over 108,000 vehicles—a 20% year-over-year and 32% month-over-month increase.

This indicates that Galaxy has successfully passed a 'stress test,' maintaining its market share during a challenging industry downturn and leading the rebound—an affirmation of its product strength and brand value. Currently, models like the Galaxy M7 and Xingyao 7 MAX are emerging from their production ramp-up phase, while the Xingyao 7 and Galaxy E5 continue to sell steadily overseas, setting the stage for even stronger future performance.

Geely Xingyuan has forged a dual-market growth strategy—achieving volume domestically while generating profits overseas. In June, Xingyuan’s export sales accounted for 40% of its total sales and also represented 40% of Galaxy brand’s total export volume. In the first half of the year, Xingyuan’s exports already reached 87,000 units.

The pricing gap between domestic and international markets is key to understanding Xingyuan’s business model. In Brazil, the Xingyuan is priced at approximately RMB 160,000–180,000. By comparison, the 2026 Xingyuan model’s official domestic price range is RMB 64,800–94,800. This means the domestic market leverages economies of scale to reduce per-unit fixed costs, while the overseas market’s higher pricing directly contributes significant profit margins.

Meanwhile, under Geely’s fully integrated system—from R&D to manufacturing—Xingyuan benefits from technological empowerment in areas such as architecture, enabling it to scale without heavily relying on brand resource allocation. Even as an entry-level A0-segment vehicle, it still possesses strong growth momentum driven by high quality.

Geely Galaxy has now completed its product lineup spanning from A0- to C-segment vehicles and covering both BEV and PHEV technologies. What Galaxy is doing is consistently capturing market share from joint-venture brands within the most fiercely competitive price bands of China’s auto market. This is a slow-moving variable—one that cannot be decided by just one or two hit models. However, sales data indicate that Galaxy is already on the right track.

Additionally, the China Star series serves as Geely’s anchor in the traditional ICE vehicle market, steadily contributing operating cash flow. Lynk & Co focuses on premium personalization, accelerating its NEV transformation and leveraging Geely’s global partnership network to simultaneously enter multiple overseas markets—making it a key driver for Geely’s premium international expansion.

Overall, the four brands operate synergistically under the ‘One Geely’ framework: ICE vehicles provide a cash flow floor, mainstream NEVs cover the mass market, premium brands enhance profitability and brand value, and globalized brands expand overseas presence. This product portfolio has enabled Geely to avoid being dragged into price wars and insulated it from volatility in any single segment, ultimately achieving simultaneous growth in both scale and profit.

The Only A+H Auto Stock with Positive Growth: Three Drivers Behind Its Revaluation

Capital markets have clearly priced in Geely Auto’s past performance. Since early 2026, Geely Auto has become the only auto stock with positive returns among A+H listed peers, delivering a performance decoupled from the broader sector. The underlying reason for this counter-cyclical strength is that capital markets are systematically re-evaluating Geely’s valuation logic.

The first layer is operating quality.Valuation, after all, is the discounted value of future cash flows. Historically, investors priced automakers primarily based on sales growth—larger scale typically commanded higher valuations. However, after years of unrelenting price wars with no end in sight, an increasing number of mainstream investors are now focusing on quality metrics such as the share of premium models, overseas pricing power, and per-vehicle profitability.

Geely’s performance across these dimensions is trending positively. This is a core reason why it has attracted investor interest despite industry-wide headwinds and serves as a catalyst for further valuation upside.

The second layer is technological assets.Investors’ focus on automakers remains largely confined to income and profit statements, while the long-term value of full-stack in-house developed technologies—still largely 'invisible'—has not yet been incorporated into automaker valuations.

Geely leads the industry in building foundational infrastructure across computing power, algorithms, and data. Geely has established its Xingrui Intelligent Computing Center 2.0, delivering a total computing power of 23.5 EFLOPS—the highest among Chinese automakers. On the algorithm front, Geely leverages data from 8.5 million vehicles with ADAS capabilities, over 10 billion kilometers of intelligent driving mileage, 25 million high-value scenario video clips, and a million-level accident safety database to support continuous iteration. Qianli Haohan and Tesla’s FSD are currently the only two intelligent driving solutions in the industry with exceptionally high 'model density,' and Geely is expected to reach FSD’s current performance level by year-end.

Geely’s technology foundation supports its multi-brand portfolio, reducing R&D costs through economies of scale while unifying user experience. This long-term strategy helps differentiate its products and enables Geely to command higher pricing premiums.

The third layer is governance structure.Governance uncertainty stemming from a fragmented corporate structure often exacerbates investor concerns about the future, leading to valuation discounts. Real-world issues such as unclear resource allocation, intra-group competition, and ambiguous strategic direction under a decentralized architecture deter investors from viewing the company as a growth stock.

In June this year, Li Shufu, Chairman of Geely Holding Group, delivered a public statement that sent a positive signal. He revealed plans to consolidate, shut down, or restructure redundant entities within Geely Automobile Group Co., Ltd., concentrating strategic resources to strengthen Geely Auto Holdings Limited (0175.HK) as the core listed platform. This marks the first time since the 'Taizhou Declaration' that the company has explicitly affirmed the pivotal role of 0175.HK to external stakeholders.

This move delivers value far beyond organizational streamlining—it signifies the consolidation of brand, technology, supply chain, and channel assets onto a unified listed platform. Consequently, Geely’s vast ecosystem will gain clearer valuation visibility, fundamentally reshaping the valuation logic for Geely Auto.

Geely Auto’s value proposition has also gained recognition from international institutional investors. Data shows that in the first half of the year, 46 international institutions either increased their positions or initiated new stakes in Geely Auto, including prominent long-term funds such as BlackRock and American Century Investments. Such investors typically prioritize a company’s long-term growth trajectory and earnings quality.

Meanwhile, dozens of domestic and international investment banks—including Citi, HSBC Research, CICC, UBS Group, CLSA, Shenwan Hongyuan, and China Merchants Securities International—have assigned Geely Auto ratings such as 'Overweight,' 'Buy,' or 'Outperform.'

Among them, HSBC Research expects Zeekr’s sales growth to remain strong in the second half of this year; Citi forecasts that the launch of multiple premium models will boost Geely’s gross margin in the second and third quarters; and Daiwa anticipates that under the 'One Geely' strategy, Geely’s earnings growth from 2026 to 2028 will exceed market consensus expectations.

From a valuation perspective, Geely Auto’s current trailing twelve-month (TTM) price-to-earnings ratio of approximately 11x is not the lowest in the industry. However, given its strong product mix and profit growth momentum, this valuation still offers notable value relative to other automakers.

Thus, Geely Auto remains in a clear 'valuation trough,' and the valuation rebound seen in the first half of the year may not mark the end of the recovery. When considering multiple dimensions—operational quality, technological assets, and systematic architecture—Geely Auto has built a stronger safety cushion and a longer growth trajectory. For long-term capital, this kind of cycle-resilient certainty is precisely the scarcest asset available today.

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