Price War Batters Chinese Automakers’ Profits
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China’s total auto exports grew over 10% in the first half of 2025. Photo: Xinhua
China’s protracted auto price war is hammering carmakers’ profits and forcing them to pivot to overseas markets in search of growth.
While BYD Co. Ltd. (002594.SZ), the country’s largest electric-vehicle (EV) maker, posted a stellar first quarter, its fortunes reversed in the second quarter. After doubling in the first three months, the company’s net profit dropped by 30% to nearly 6.4 billion yuan ($900 million yuan) in the second quarter as revenue growth slowed to 14%. Its gross profit margin narrowed by 2.4 percentage points to 16.3% in the April-June period, its lowest since the third quarter of 2022.
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- China’s ongoing auto price war has slashed profits for major carmakers, with BYD’s Q2 net profit dropping 30% and the sector’s average profit falling 11.9% in early 2025.
- Automakers, including BYD and Leapmotor, are increasingly turning to overseas markets for growth; BYD’s exports surged 130% to 553,000 vehicles in seven months.
- Beijing has pushed for industry consolidation due to profit declines and oversupply, while exports face challenges such as EU tariffs and shifts in foreign markets.
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Who’s Who
- BYD Co. Ltd.
- BYD Co. Ltd., China's largest EV maker, experienced a 30% drop in net profit in Q2, totaling nearly 6.4 billion yuan. Its revenue growth slowed to 14%, and its gross profit margin narrowed to 16.3%, the lowest since Q3 2022. Despite these domestic challenges, BYD's overseas revenue soared by 50.49% to 135.36 billion yuan in the first half of the year, accounting for 36.46% of its total. The company exported 553,000 vehicles in the first seven months, marking a 130% increase.
- Geely Automobile Holdings Ltd.
- Geely Automobile Holdings Ltd. experienced a 14% drop in first-half profit to nearly 9.3 billion yuan, despite a 27% increase in revenue. Their average selling price per vehicle fell by 13% to 95,516 yuan. Additionally, their first-half exports decreased by 7.7% to 184,000 vehicles, attributed to declining sales in Eastern Europe.
- SAIC Motor Corp. Ltd.
- SAIC Motor Corp. Ltd. experienced a 9% decrease in first-half profit, which totaled 6 billion yuan. The company's overseas sales saw a modest 1.27% growth, reaching 494,000 units in the first half. This slower growth might be linked to a 35.3% anti-subsidy tariff imposed by the EU. SAIC is expanding its MG brand into markets like the Middle East, and its IM Motors brand is targeting Thailand, the U.K., and Australia.
- Nio Inc.
- Nio Inc. is an electric vehicle startup. The company successfully narrowed its second-quarter losses to 4.99 billion yuan by introducing more affordable models to its lineup.
- XPeng Inc.
- XPeng Inc., an EV startup, successfully narrowed its second-quarter losses to 480 million yuan. This improvement is attributed to their strategy of introducing more affordable models to their product lineup, which has helped them navigate the competitive auto price war in China.
- Guangzhou Automobile Group Co. Ltd.
- Guangzhou Automobile Group Co. Ltd. (601238.SH), a state-owned enterprise, experienced a significant downturn. Its first-half revenue decreased by 7.9% to 42.1 billion yuan, resulting in a net loss of 2.53 billion yuan. This is a dramatic reversal from the 1.52 billion yuan net profit it recorded during the same period last year.
- Zhejiang Leapmotor Technology Co. Ltd.
- Zhejiang Leapmotor Technology Co. Ltd. (Leapmotor) is an EV startup that exported over 20,000 units in the first half of the year, aiming for a 50,000-unit annual target. Through its partnership with Stellantis NV, Leapmotor has established over 600 overseas sales and service outlets and plans to build a European factory by late 2026.
- Stellantis NV
- Stellantis NV is partnered with Zhejiang Leapmotor Technology Co. Ltd. This partnership has helped Leapmotor to establish over 600 sales and service outlets abroad. There are also plans for Leapmotor to build a factory in Europe by the end of 2026.
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What Happened When
- 2022：
- China's auto manufacturing sector had a profit margin of 5.7%.
- Third quarter of 2022：
- BYD previously recorded an even lower gross profit margin.
- Late 2024：
- EU slapped a 35.3% anti-subsidy tariff on SAIC cars.
- First half of 2024：
- GAC recorded a net profit of 1.52 billion yuan.
- As of 2025：
- China's auto price war is in its third year.
- 2025：
- Leapmotor targets 50,000 unit annual exports.
- As of 2025：
- Leapmotor has established over 600 sales and service outlets abroad.
- Since February 2025：
- Policymakers and regulators have pushed for consolidation in the auto industry.
- First quarter of 2025：
- BYD posted a stellar first quarter with net profit doubling from the previous period.
- First five months of 2025：
- Average profit in China’s automotive manufacturing sector fell 11.9%; profit margin dropped to 4.3% from 5.7% in 2022.
- First half of 2025：
- Geely's profit dropped 14% to nearly 9.3 billion yuan, revenue grew 27%, average selling price per vehicle declined 13%, partly due to a government trade-in program.
- First half of 2025：
- SAIC Motor's profit fell 9% to 6 billion yuan.
- First half of 2025：
- GAC's revenue fell 7.9% to 42.1 billion yuan, with a net loss of 2.53 billion yuan, reversing from a net profit in the first half of 2024.
- First half of 2025：
- BYD’s overseas revenue soared 50.49% to 135.36 billion yuan, accounting for 36.46% of its total, up 6.59 percentage points from 2024.
- First half of 2025：
- Geely’s exports fell 7.7% to 184,000 vehicles, while China's total auto exports grew 10.3%.
- First half of 2025：
- SAIC Motor's overseas sales grew 1.27% to 494,000 units, possibly affected by anti-subsidy tariffs imposed in late 2024 by the EU.
- First half of 2025：
- Leapmotor exported over 20,000 units.
- Second quarter of 2025：
- BYD's net profit dropped by 30% to nearly 6.4 billion yuan as revenue growth slowed.
- Second quarter of 2025：
- Nio and XPeng narrowed losses to 4.99 billion yuan and 480 million yuan respectively through affordable models.
- April–June 2025：
- BYD's gross profit margin narrowed to 16.3%, its lowest since the third quarter of 2022.
- 2025 (by half-year report)：
- SAIC's MG marque expanding to Middle East, IM Motors launched in Thailand, UK, and Australia.
AI generated, for reference only
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