In September 2026, overseas investment bank JPMorgan released the latest industry research report regarding the Chinese passenger car market, giving an overall prudent assessment on the domestic vehicle sector, only prioritizing BYD and Geely, two car companies with scale, diversified products, and globalization capabilities. The underlying motive is the H1 2026 financial reports of domestic car companies just released.

The prudent tone of this report is not groundless speculation, but based on the actual operating results of the domestic auto market in H1 2026. Official data from CAAM is right in front: Total domestic car sales in H1 were 15.017 million, down only 4.1% year-on-year. Market volume remains huge, consumer demand has not collapsed. But opening mainstream car company financial reports, the industry's profit system almost collectively collapsed: net profit basically fell across the board, over half of car companies fell into loss, many old top players shifted from profit to loss.

Many people think the difficulty in the car market is "can't sell". The real status is: cars are still sold, just thinner margins, deeper losses the more it sells.

The biggest abnormal reversal in the H1 car market this year: growth was all in revenue and sales, collapse was all in profit.

Among 16 mainstream listed car companies, only Leapmotor, NIO, JAC, BAIC BluePark had net profit indicators achieve year-on-year positive growth. But this group of bright data is completely a "verbal trap": the latter three didn't profit at all, just loss width narrowed, book still losing money. Only Leapmotor truly profited and profit surged in the whole industry.

More terrifying than losses is profit regression. Seres, Li Auto, Voyah, BAIC Motor four last year still steadily made money. This year H1 collectively shifted from profit to loss, directly fell from profit tier into loss quagmire. Market iteration speed far exceeded everyone's imagination.

More subversive to cognition is: even the industry absolute leader, cannot withstand this profit winter.

Take BYD as example. As the industry profit ceiling, it is still the only one in the whole industry with net profit over 10 billion. Basic market share no one can shake. But vertically compared to same period last year, decline data glaring to the naked eye: H1 revenue 344.815 billion yuan, year-on-year 7.13%; net profit attributable to parents 12.325 billion yuan, year-on-year significantly down 20.54%, gross margin fell back to 18.85%.

Simple calculation reveals the truth: BYD sales still leads globally, but vehicle profitability is continuously shrinking. Domestic price war has precisely pierced the leader's profit floor.

If BYD is "earned less", then Great Wall Motor is "earned it all away", perfectly confirms the dilemma of traditional car companies.

Great Wall this year seems comprehensive improvement: H1 sales 575,800 vehicles, year-on-year slight increase 1.22%; revenue first exceeded 100 billion in H1, reached 102.101 billion yuan, year-on-year realized positive growth. Sales, revenue double increase, should be a favorable report card. Result profit directly halved then halved again: net profit attributable to parents only 2.465 billion yuan, year-on-year plummeted 61.11%.

Car companies have entered the distorted stage of "volume without profit, revenue increase without profit increase". Surface sales red fire, inside profit already riddled with holes.

In the industry full loss tide, uniquely killed out a counter-trend steady outlier, again subvert industry cognition.

Geely Automobile became the head only steady basic market share car company: H1 sales 1.423 million vehicles, year-on-year slight increase 1%; revenue 173.6 billion yuan, year-on-year surged 14.67%; net profit attributable to parents 9.09 billion yuan, only slightly down 1.79%, gross margin stable at 17.90%.

In the large environment of full industry profit plummet, nearly zero decline profit performance appears especially scarce. Its counter-cyclical logic is very clear: Zeekr high-end models volume boost lift product average price, overlay overseas exports continuously increase revenue. Using product upgrade + globalization, hedged against domestic fierce price war. This is also the core direction for subsequent car companies to break the situation.

Many people doubt: Sales didn't drop big, where did the car companies money go lost? Two full industry common reasons, reveal the answer.

First, manufacturing costs fully up, squeeze full industry gross margin. Lithium carbonate, chips, copper, aluminum etc raw material prices rose, directly lift per-vehicle manufacturing cost. NIO's Li Bin openly admitted: compared to end of last year, this year Q2 per-vehicle cost up 14,000 yuan. H2 will also up 2,000 yuan again.

Cost up treat all car companies equally, but leader can rely on scale, supply chain advantage hedge. SMEs, new forces can only hard carry. Loss naturally continuously expand.

Second, currency fluctuation violently, swallow overseas car companies profit. Now head car company overseas ratio extremely high. Chery export ratio about 70%, Great Wall over 50%, BYD, Changan over 40%, Geely, SAIC over 30%.

Great Wall's Wang Xingjun directly points out profit down key: Overseas tax subsidy payment delay, currency fluctuation drag performance. But most key reversal is here: excluding exchange rate, one-time gains/losses, most head car companies real profit actually in big surge.

Data won't lie: SAIC adjusted core net profit 7.87 billion yuan, year-on-year surge 72%; Changan adjusted profit year-on-year growth 12%; Geely adjusted core net profit 9.68 billion yuan, year-on-year big increase 46%.

This means, car companies main business earning ability didn't collapse. Just short-term external factors covered real strength. Globalization long ago not bonus, but car company survival core trump card.

More key incremental fact is: Overseas market not only risk avoid, but also earn higher profit.

BYD H1 overseas revenue 181.268 billion yuan, year-on-year surge 33.9%, account for total revenue half more. JPMorgan precise calculation: BYD domestic vehicle profit about 10,000 yuan, overseas vehicle profit over 20,000 yuan. Profitability is domestic market two times. With Hungary, Indonesia, Brazil overseas factories continuously ramp up, overseas high profit bonus will continue release.

Also precisely saw through this industry underlying logic, JPMorgan gave extremely sober differentiated judgment: Keep prudent on Chinese passenger car industry overall. Not blindly bullish. Only long term firmly first choice BYD, Geely two leaders. At the same time strategy bullish counter-cyclical heavy truck track.

Current car market, long ago said goodbye to "Sales is King" era.

2026 H1 Report given ultimate answer very cruel: Domestic involution kill profit, overseas increment save company. Car companies only can in domestic price cut involution, being market eliminated. Holding scale, diversified product, globalization layout leader, crossing industry winter.

This thunderous car market reshuffle just started: Sales decide hype, profit decide life and death, overseas decide future.

 Source: Car Observer

August 25, the Silk Road 10,000-Mile Journey activity, bearing world-class historical and cultural significance, concluded successfully in Singapore!

This fleet, composed of five BYD networks and four brands, departed from Xi'an, the starting point of the Silk Road, lasted 33 days, crossed six domestic provinces, passed through Thailand, Malaysia, and finally arrived in Singapore. Along the way, Flash Charge efficiently replenished energy, God's Eye ensured safety and peace of mind, and Cloud Suspension provided comfortable and stable travel. BYD used disruptive technology to solve all pain points of long-distance travel for new energy vehicles.

In Singapore, BYD is regarded by local users as high-end luxury cars. Taking the Dolphin as an example, the price in Singapore is around 900,000 RMB, truly unaffordable for ordinary people. Even selling at such a high price, sales rose steadily. From January to July, the market share of the overall passenger car market was 24.7%, occupying one-quarter of the entire Singapore passenger car market. Among them, the market share of pure electric vehicles reached 40.3%. It has also ranked first in total brand sales for 19 consecutive months.

Currently, BYD New Energy Vehicles have entered 120 countries and regions. In the first half of this year, sales in Thailand, the UK, Italy, Spain, Saudi Arabia, the UAE, South Africa, and other places were booming. In Brazil, nearly 100,000 units were sold in just 6 months.

From January to July, overseas cumulative sales exceeded 970,000 units, a year-on-year increase of 76%; July overseas sales were 179,800 units, a year-on-year increase of 124.3%.

Based on overseas sales figures, it can be seen that foreigners do not favor century-old brands. Seeing the reliable, safe, smart, and energy-efficient BYD, they simply cannot turn away.

In ancient times, there was the Silk Road; Zhang Qian's mission to the Western Regions opened up ancient trade routes. Today, BYD New Energy Vehicles cross borders for travel, retracing the Silk Road with China's smart manufacturing, supporting green transportation on the Belt and Road, and using technical strength to promote green transformation.

Malaysia's four-year electric vehicle import tax exemption policy has officially ended. The new regulations implemented on July 1 directly tightened the entry threshold for imported electric vehicles. Regarding complete vehicle imports, the new regulations require that the CIF price of all CBU electric vehicles must not be lower than 200,000 Ringgit (approximately 320,000 RMB), and the motor output power must not be lower than 180 kW (about 241 hp). Both conditions must be met simultaneously; neither can be missing.

Relying on the previously relaxed environment, Chinese brands once captured 60% of the new energy vehicle market share in Malaysia. Now, the local market intends to replicate the industrialization model of local automakers, forcing foreign investment to shift from complete vehicle trading to local manufacturing. After all, no one wants to be just a dumping ground for goods.

Electric Vehicle New Policy Heavy Implementation in July

After the four-year electric vehicle import tariff exemption period ends, Malaysia significantly tightened complete vehicle import rules, upgrading the previously duty-free 100,000 Ringgit CIF threshold to a mandatory 200,000 Ringgit entry baseline, while rigidly binding a 180 kW motor power lower limit; both conditions are indispensable. Previously, the 100,000 Ringgit was only the tariff exemption line, the price point perfectly fit the pricing system of main home-use models going overseas, BYD Dolphin, entry-level Atto 3, and other volume-selling models relied on cost advantages during the tax exemption period, becoming core products for Chinese brands to seize the local market.

After the CIF price is raised to 200,000 Ringgit, adding import tariffs, domestic sales tax, and dealer markups, estimated based on the current tax and fee structure of the Malaysian automotive market, the final vehicle price will reach above 300,000 Ringgit, converting to RMB, it is close to 480,000. Most Malaysian households' car purchasing budgets are in the range of 100,000 to 250,000 Ringgit, this price range of 300,000 Ringgit is a niche market where Tesla and BBA pure electric models have already dug deep, there are very few models domestically that can cross both rigid thresholds, the price-friendly family car base that Chinese brands originally stabilized via pure import routes is essentially locked by the policy; while vehicles assembled locally via CKD can still legally cover the mainstream family consumption price range of 100,000 to 250,000 Ringgit.

Many brands can choose to rent existing local factories for knocked-down assembly production, Leapmotor uses Stellantis idle production lines to launch C10, Xpeng partners with local manufacturers to launch right-hand drive G6, by reusing existing capacity to avoid the strict clauses of 80% mandatory export for new factories, this is the easiest flexible method to implement at present. However, this light-asset OEM model has many hidden dangers from the perspective of long-term industrial layout.

Car companies do not own production lines, unable to independently expand production schedules during peak order surges, production line modifications for model updates are also subject to the partner's will, the production rhythm is hard to control completely by themselves. More critically, core components like batteries, electronic controls still rely on being shipped separately from domestic sources, localization only stays at the final process. Referencing Indonesia's practice of continuously raising local component ratios, the local 2030 target for new energy vehicle local component penetration rate is set at 80%, the overall industrial orientation in Southeast Asia is forcing upstream supply chains to land locally, the model of only simple assembly will eventually face policy constraints.

Moreover, this detour route itself has no permanent guarantee at the legal level, Malaysia can update industrial regulations at any time later, including existing factory cooperation projects into export quota supervision, this shortcut could be tightened or blocked at any moment. The export strategy of only doing trade output and unwilling to deeply bind local industrial chains has no more sustainable space.

Chinese Automakers Face Major Differentiation

Geely Holdings is the biggest indirect beneficiary of this round of policies. Geely holds 49.9% of shares in Malaysia's traditional state-owned automaker Proton, and Proton itself holds original CKD production qualifications, it does not belong to the new foreign investment factory construction projects approved after September 2025. This means the strictest 80% mandatory export quota in the new regulations cannot constrain Proton from the start. Proton has no ratio restrictions on sales in the local market, and can long-term enjoy policy inclinations for local component support, effectively standing in the safe zone by nature within the environment of tightening policies.

In addition, Xpeng Motors relies on EPMB's existing factory in Melaka State to carry out CKD complete knocked-down assembly, Leapmotor uses Stellantis's own complete vehicle factory located in Kulim, Kedah, Malaysia for local assembly. Both types of projects belong to reusing existing local capacity, and can be exempted from the requirement of 80% mandatory export quota in the new regulations.

While BYD's wholly-owned new factory planned in Perak State, Chery's new industrial park planned in Selangor State, both belong to new manufacturing projects approved after September 2025, will be strictly constrained by the 80% export quota; brands like Great Wall Motors relying on pure imports of affordable models, directly face the impact of losing the access qualification for main models.

The core logic of the new regulations is actually setting up a double barrier for "new foreign players", clearly not welcoming foreign enterprises that only focus on building capacity in the local market. The remaining options for foreign brands are very limited: either introduce high-end models via pure import routes, giving up the mainstream volume market; or rent existing local production lines for knocked-down assembly, production capacity rhythm and cost control are all subject to others, hard to form scaled price competitiveness.

Viewing the entire Southeast Asian market dimension, this logic is not unfamiliar. Thailand and Indonesia's industrial policy directions have been highly consistent in the past two years: the threshold for complete vehicle imports continues to rise, the core conditions for market access are gradually shifting from product competitiveness to the depth of localization investment.

In early years, when most Chinese electric vehicle brands first entered Southeast Asia, they followed a typical trade route: controlling costs by relying on the scale advantages of the domestic supply chain, and rapidly distributing goods after complete vehicles are shipped by sea, relying on price differences, most stayed at the superficial cooperation stage of "selling products". However, a few brands like Geely have already completed deep localization layout through the method of investing in local car companies.

Now, the demands of ASEAN core markets have shifted from "richening consumption choices" to "driving local industrial upgrades", the exchange chips for market access have also changed from pure product power to capacity landing, technology transfer, and supply chain driving capabilities. Brands that only do commodity output and are unwilling to do industrial binding will sooner or later be squeezed into niche peripheral markets by gradually tightening rules.

In other words, the export 1.0 stage relying purely on complete vehicle distribution has reached its end in the Southeast Asian market.

Consumer Car Review

Actually, the screening logic of the Southeast Asian market has never changed: It welcomes co-builders who bring the industrial chain, not passersby who only sell products. When rules tighten step by step, the winning hand of going overseas has long shifted from product costs, pricing strategies, to the ability to predict industrial rules, and the depth of layout rooted in the local area.

After all, a model without an industrial anchor point will ultimately not go far.