China Auto: Survival Of The Fittest

China's auto sector will be a survival of the fittest over the next 12-24 months. Margin pressure remains high for auto makers because of a price war and rising sales of electric vehicles (EVs). We expect domestic light vehicle sales to grow by 0%-3% annually in 2025-2026, from 0%-2% in 2024. Domestic EV sales will likely rise 10%-20% a year over the period, from about 30% this year. Upside may emerge if the government steps up stimulus that boosts economic growth and consumer confidence. Key risks are demand weakness, intense competition, and the transition to EVs.

...Domestic electric vehicle (EV) sales to rise 10%-20% a year over the period, from about 30% this year....

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