China's auto market saw weak and divergent orders in May/June, with strong resilience in low-priced NEVs while luxury and joint-venture brands came under pressure

Overview

This report is a summary of Citi's conference call on China's auto manufacturers sector, with core content drawn from an expert discussion on June 16 with auto media commentator Sun Shaojun. The report focuses on order trends and competitive dynamics in China's passenger vehicle market in May and June, pointing out that the market is generally weak but clearly differentiated: the decline in ICE vehicles has not fully translated into incremental NEV demand, low-priced NEVs remain resilient, while luxury vehicles, joint-venture brands, and some flagship SUVs are facing downward order pressure.

Core views

The core judgment of the report is that short-term demand in China's auto market remains soft, but structural opportunities are concentrated in NEV brands with more affordable pricing and stronger product cycles. Weekly orders for BYD and Leapmotor remain at relatively high levels, Tesla China improved sequentially on the expected launch of FSD, and GAC Aion was boosted by the launch of the i60; in contrast, some models or brands such as BBA, joint-venture brands, Denza, Zeekr, and Li Auto are facing slower orders, intensifying competition, or product-cycle pressure. The expert also believes that if the market remains weak, the likelihood of policy stimulus after July will rise.

Analysis framework

The report uses expert calls and high-frequency weekly order tracking to cross-check brand orders, model launches, delivery cycles, powertrain penetration, price changes, and policy expectations. The report is more focused on tracking industry momentum and competitive dynamics rather than being a deep-dive report based on a single company's financial model or valuation framework.

Methodology notes

• Expert interviewIndustry expert conference call

  Frontline orders and consumer feedback

  The report mainly cites auto media commentator Sun Shaojun's views on market performance, brand orders, and model feedback in May and June.

• High-frequency data trackingWeekly order comparison

  Comparison of weekly brand orders versus two weeks earlier

  The report identifies shifts in brand momentum and market share migration by comparing last week's orders with those from two weeks earlier and the same period last year.

• Competitive landscape analysisSegmentation by powertrain type and price band

  Differentiation across BEV, PHEV, EREV, ICE, and price bands

  The report breaks the market into segments including ICE vehicles, NEVs, BEVs, PHEVs, EREVs, and luxury vehicles to assess changes in demand strength and penetration.

• Scenario assessmentObservation of policy stimulus and cost pressure

  Policy support and raw material inflation

  Based on the historical pattern that auto stimulus policies usually appear after July, the expert judges that the weaker the market, the higher the probability of stimulus; at the same time, he tracks the impact of rising raw material costs on new car pricing.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BYD

  Leading mass-market NEV player and one of the most resilient brands in this order tracking

  Strengths

  Orders were about 50,000 units last week, overseas demand is strong, customer feedback on second-generation blade battery models is positive, and the launch of Great Tang may continue to drive orders.

  Weaknesses

  The decline in conversion from small deposits to firm orders may affect actual delivery realization, and pricing of some models already reflects higher raw material costs.

  Comparison

  Its order scale is clearly above most NEV brands and, together with Leapmotor, it is one of the representatives that the expert sees as having stronger mass-market resilience this time.

  Risks

  Post-launch conversion rates for new models may fall short of expectations, price competition may intensify, and rising costs may compress margins.

• Leapmotor

  Mass-market NEV brand supported by rising BEV penetration

  Strengths

  Weekly orders were about 12,500 to 13,000 units, with clear contributions from the A10, B series, and D19, while the upgraded C series launch may bring incremental demand.

  Weaknesses

  Order volume is below BYD, and product momentum still needs ongoing validation from new model launches.

  Comparison

  Like BYD, it benefits from rising BEV penetration, and versus Geely Galaxy, whose 1H26 pipeline is more skewed toward new PHEV models, its near-term performance is stronger.

  Risks

  Demand may disappoint after new model launches, and price increases driven by raw material costs may affect demand.

• BBA（BMW、Benz、Audi）

  Traditional German luxury brands under pressure in China's premium market

  Strengths

  Brand recognition remains strong, with an established user base and luxury distribution channels.

  Weaknesses

  Weekly orders have fallen sharply from last year, with share continuing to be taken by domestic premium NEV brands.

  Comparison

  Compared with domestic premium NEV players such as AITO, Nio, and Huawei HIMA, BBA faces structural pressure in smart features and NEV transition.

  Risks

  Continued market share losses, wider price discounts, and insufficient localization within the joint-venture system.

• Xpeng

  Smart EV brand whose orders are affected by delivery cycles

  Strengths

  Orders were about 6,000 units last week, with M03 contributing more than 2,000 units.

  Weaknesses

  GX orders declined due to a long delivery timeline, and total weekly orders were below the level of two weeks earlier.

  Comparison

  Its order scale is below BYD, Leapmotor, Huawei HIMA, and Tesla China.

  Risks

  Excessively long delivery cycles may lead to order loss, and new models may fail to sustain strong interest.

• Nio

  Premium NEV brand, excluding Onvo in this measure

  Strengths

  Orders were about 6,500 units last week, ES9 has relatively strong visibility, and steady-state weekly orders are expected at about 2,000 units.

  Weaknesses

  Total orders fell from above 7,000 units two weeks earlier, and some models are in highly competitive segments.

  Comparison

  Competition in the premium SUV market is intensifying versus AITO, Stelato, Li Auto, Zeekr, and others.

  Risks

  Competition may intensify after multiple five-seat SUV launches in 2H26, reducing order visibility.

• Li Auto

  Representative EREV and family SUV brand

  Strengths

  The L series still contributed about 2,000 weekly orders.

  Weaknesses

  Total weekly orders were about 4,500 units, with L9 below 1,000 units and under pressure from ES9 and M9.

  Comparison

  The report believes EREV penetration may continue to decline, leaving Li Auto facing powertrain transition pressure relative to BEV-oriented brands.

  Risks

  Weakening EREV demand, substitution by competing premium SUVs, and continued pressure on L-series orders.

• Tesla China

  Important foreign brand in China's NEV market

  Strengths

  Orders exceeded 10,000 units last week, improving from about 9,000 to 10,000 units two weeks earlier, with expectations boosted by the upcoming FSD launch.

  Weaknesses

  Order improvement depends relatively heavily on catalysts such as FSD, while local brands continue to compete on price and products.

  Comparison

  Its order scale is above most new-force brands, but below BYD.

  Risks

  The rollout pace or effect of FSD may disappoint, while price competition and regulatory factors may affect demand.

• Huawei HIMA

  Huawei's smart vehicle ecosystem, covering brands such as AITO, Luxeed, Shangjie, and Maextro

  Strengths

  Orders were about 11,000 units last week, with AITO contributing about 7,500 units; the expert is positive on Stelato G9, seeing differentiation from Huawei's customer base.

  Weaknesses

  Total orders were below about 13,000 units two weeks earlier, while Maextro was affected by wait-and-see sentiment ahead of the S800 Grand Design, V680, and V800 launches.

  Comparison

  In the competition around premium NEVs and smart features, it holds a local smart-ecosystem advantage over BBA.

  Risks

  Wait-and-see sentiment ahead of new launches may drag on orders, and coordination and positioning across multiple sub-brands require continued validation.

• Geely Galaxy

  Geely's NEV sub-brand, with the report focusing on comparison against BYD and Leapmotor

  Strengths

  If it launches more BEV models in 2H26, the expert expects sales may recover.

  Weaknesses

  Most new models in 1H26 are PHEVs, weighing on performance as PHEV penetration declines.

  Comparison

  In the short term, it lags BYD and Leapmotor, which are benefiting from rising BEV penetration.

  Risks

  The pace and market reception of new BEV launches may disappoint, while PHEV demand may continue to weaken.

• Zeekr

  Premium NEV brand, with focus on order visibility for 9X and 8X

  Strengths

  The 9X has an order backlog of about 10,000 to 15,000 units, enough to support deliveries through July.

  Weaknesses

  Orders were above 4,000 units last week, below about 5,000 units two weeks earlier; sales visibility for the 8X is relatively weak going forward.

  Comparison

  In 2H26 it will face competition from five-seat SUVs such as AITO M8, Stelato G9, Nio ES8, and Li L8.

  Risks

  New demand may be insufficient after the backlog is absorbed, while competition in premium SUVs intensifies.

• Denza

  Premium NEV brand

  Strengths

  It still has about 2,000 weekly orders.

  Weaknesses

  This is a notable decline from 3,000 to 3,500 units two weeks earlier.

  Comparison

  Order momentum is weaker than BYD's main brand, Leapmotor, Huawei HIMA, and Tesla China.

  Risks

  Competition in the premium NEV market is intensifying, and model popularity is declining.

• GAC Aion

  GAC's NEV brand

  Strengths

  Orders were about 4,500 units last week, up from about 3,000 units two weeks earlier, mainly driven by the i60 launch.

  Weaknesses

  The order improvement depends on new model launches, and its sustainability remains to be seen.

  Comparison

  Supported by a new model, its short-term performance is better than some brands seeing order declines.

  Risks

  Interest in the i60 may fade after launch, while competing models may divert orders.

Key data

• May passenger vehicle marketSales below expectationsThe expert said ICE vehicle sales declined significantly, while NEV sales were broadly flat month on month, meaning the decline in ICE vehicles did not clearly convert into incremental NEV demand.
• June market trendContinued softness with divergenceThe NEV segment priced below RMB 200,000 remained resilient, while orders in luxury segments such as traditional BBA and flagship SUVs from NEV brands fell significantly.
• BYD orders last weekAbout 50,000 unitsAbout 52,000 units two weeks earlier; this included dealer buybacks of small-battery PHEVs for overseas sales, with a scale of less than 5,000 units. Great Tang, launched on June 17, is expected to further boost orders.
• Leapmotor orders last weekAbout 12,500 to 13,000 unitsAbout 13,000 units two weeks earlier; A10 at about 4,000 to 4,500 units, B series at about 2,000 to 3,000 units, and D19 at about 1,500 units; the upgraded C series, launched on June 16, may boost orders.
• BBA competitive pressureWeekly orders per brand all significantly below last yearBMW China was about 6,500 units last week, Audi China about 6,000 units, and Benz China below 7,000 units; versus about 11,000 to 12,000 units in the same period last year, showing that domestic premium NEV brands continue to take share.
• Xpeng orders last weekAbout 6,000 unitsAbout 6,500 units two weeks earlier; GX at about 1,000 to 1,500 units, M03 above 2,000 units; the expert attributed the decline in GX orders to a longer delivery cycle.
• Nio orders last week excluding OnvoAbout 6,500 unitsAbove 7,000 units two weeks earlier; ES9 at about 2,000 units, ES8 at about 2,500 units, and Firefly at about 1,300 units; the expert believes ES9's steady-state weekly orders are about 2,000 units.
• Li Auto orders last weekAbout 4,500 unitsThe L series contributed about 2,000 units, of which L9 was below 1,000 units; the expert said ES9 and M9 are putting pressure on L9 sales.
• Xiaomi orders last weekAbout 5,000 unitsAbout 6,000 units two weeks earlier; YU7 at about 2,500 to 3,000 units and SU7 at about 2,000 units.
• Tesla China orders last weekAbove 10,000 unitsAbout 9,000 to 10,000 units two weeks earlier; the week-on-week increase was mainly driven by the expected launch of FSD within the next 2 to 3 weeks.
• Huawei HIMA orders last weekAbout 11,000 unitsAbout 13,000 units two weeks earlier; AITO at about 7,500 units, Luxeed about 1,500 units, Shangjie about 1,500 units, and Maextro about 1,100 to 1,200 units.
• Zeekr orders last weekAbove 4,000 unitsAbout 5,000 units two weeks earlier; 9X and 8X together were about 1,500 units. The expert estimates that Zeekr 9X currently has an order backlog of about 10,000 to 15,000 units, enough to support deliveries through July.
• EREV penetration trendExpected to continue decliningThe expert believes EREV battery capacity is close to its ceiling, with BEV range at around 400 km; entry-level BEVs priced around RMB 100,000 can already deliver 600 to 700 km of pure electric range.
• Order conversion rateAbout 35% to 40%The industry's conversion rate from small deposit to firm order has dropped from 60% to 70% in previous years to about 35% to 40% this year.
• Raw material cost impactSome models may raise prices in 2H26The expert said the launch prices of Leapmotor A10 and new BYD models were higher than expected, already reflecting rising raw material costs.

Impact & implications

For investors, the report suggests that aggregate demand in China's auto industry remains weak in the short term, and investment opportunities are more likely to come from divergence across brands and models rather than a synchronized recovery across the whole industry. Mass-market BEVs and leading brands supported by overseas demand are more resilient in orders; luxury vehicles, joint ventures, EREVs, and some flagship SUVs will face fiercer substitution competition. If policy stimulus is introduced after July, demand expectations may improve, but if order conversion rates continue to decline or raw material costs keep rising, pressure on pricing and margins may persist.

Risks

• Total auto market demand may continue to weaken, and the decline in ICE vehicles may fail to convert effectively into incremental NEV demand.
• The timing or intensity of policy stimulus may fall short of expectations, causing a post-July demand recovery to miss.
• The conversion rate from small deposits to firm orders may decline, meaning order data may not fully translate into deliveries and revenue.
• Rising raw material costs may push up prices for some models, potentially suppressing demand or squeezing margins.
• Competition in premium SUVs and luxury NEVs may intensify, reducing order visibility.
• If joint-venture brands fail to localize sufficiently, they may face further production halts, exits, or market share losses.
• Expert calls and weekly orders are high-frequency tracking indicators and may differ from final retail, wholesale, or financial results.

What to watch

• Whether auto stimulus policies are introduced after July, and the scope and intensity of any subsidies.
• Weekly order changes and small-deposit-to-firm-order conversion rates after the launch of BYD Great Tang.
• The sustained boost to orders from new models such as Leapmotor's upgraded C series and GAC Aion i60.
• The actual impact on orders and deliveries after Tesla China launches FSD in the next 2 to 3 weeks.
• The pace of Zeekr 9X backlog digestion and order visibility for the 8X amid the 2H26 wave of new five-seat SUVs.
• Whether weekly orders for BBA and joint-venture brands continue to decline, and whether production suspensions or more aggressive localization adjustments emerge.
• Changes in BEV, PHEV, and EREV penetration, especially whether EREVs remain under pressure.
• The impact of raw material prices and new car pricing changes on demand, gross margins, and the intensity of price wars.