China Autos & Shared Mobility Report Interpretation

Overview

This industry update reviews July delivery trends for major China auto and EV manufacturers. Morgan Stanley interprets the broad slowdown as seasonal, while pointing to improving supply, overseas demand and forthcoming model launches as potential drivers of a sequential recovery.

Core views

Morgan Stanley frames July as a seasonal summer lull rather than a new industry conclusion. China passenger-vehicle retail sales fell about 15% year-on-year, and the EV trio of NIO, XPeng and Li Auto all recorded weaker month-on-month deliveries. The institution considers the lackluster month broadly anticipated and says the key near-term question is how quickly sales momentum returns in August. BYD was the principal exception in growth terms. It delivered 419,211 units in July, up 4% month-on-month and 22% year-on-year, its strongest year-on-year growth rate since May of the prior year. Overseas sales rose 124% year-on-year to 180,000 units, while the domestic sales decline narrowed to less than 10% year-on-year. Morgan Stanley attributes the year-on-year performance partly to an easy comparison and record overseas sales, and expects improving battery supply plus launches including Sealion 08, Qin MAX and Great Han to help defend domestic market share in 2H26. Geely delivered 250,161 units, up 4% month-on-month and 5% year-on-year. Overseas sales of 107,000 units accounted for 43% of deliveries, offsetting continued year-on-year domestic-sales pressure as inventory was digested. Within its brands, Zeekr sales more than doubled year-on-year, whereas Lynk & Co deliveries fell 40% year-on-year. Among the EV-focused OEMs, XPeng delivered 38,027 units, down 5% month-on-month but up 4% year-on-year, with growth moderating after the GX launch. Morgan Stanley expects MONA L03 to make a meaningful contribution to domestic and overseas volume in August; overseas sales are described as likely margin-accretive. Li Auto delivered 30,468 units, down 1% both month-on-month and year-on-year, as sales recovered from a pre-launch slowdown with contributions from the L6 and L8. NIO delivered 35,934 units, down 11% month-on-month but up 71% year-on-year; ONVO deliveries declined 14% month-on-month and NIO-branded deliveries fell 9% month-on-month after the ES9 launch. The delivery table also shows strong year-on-year July growth for Leapmotor at 101,267 units, up 102%, while Xiaomi delivered 30,000 units, down 14% month-on-month and 1% year-on-year, and HIMA delivered 45,046 units, down 11% month-on-month and 5% year-on-year. Year-to-date through July, NIO and Leapmotor each grew 68% year-on-year, while BYD’s cumulative deliveries were down 11% year-on-year. The report’s overall industry view remains In-Line.

Analysis framework

Morgan Stanley compares July deliveries with both June and the prior-year month, then interprets the results against seasonal passenger-vehicle retail demand, overseas-sales contribution, inventory conditions, supply availability and the timing of new-model launches.

Methodology notes

• Industry AnalysisVolume-price decomposition

  Monthly delivery tracking with month-on-month and year-on-year comparisons

  The report uses delivery volumes and growth rates to distinguish seasonal demand weakness from company-specific drivers such as exports, inventory digestion, supply and product launches.

Asset mapping & comparison

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

• BYD Company Limited

  Covered OEM benefiting from record overseas sales and expected supply and product support.

  Strengths

  July deliveries rose 22% YoY; overseas sales rose 124% YoY to 180,000 units.

  Weaknesses

  Domestic sales still declined year-on-year, though by less than 10%.

  Comparison

  Delivered the strongest cited year-on-year growth among the major OEM discussion.

• Geely Automobile Holdings

  Covered OEM with overseas sales offsetting domestic inventory digestion.

  Strengths

  Overseas sales represented 43% of July deliveries; Zeekr sales more than doubled YoY.

  Weaknesses

  Domestic sales continued to decline YoY and Lynk & Co deliveries fell 40% YoY.

  Comparison

  July deliveries rose 5% YoY, below BYD’s 22% growth.

• XPeng Inc.

  Covered EV OEM expected to gain incremental volume from MONA L03.

  Strengths

  MONA L03 is expected to add domestic and overseas volume, with overseas sales likely margin-accretive.

  Weaknesses

  July deliveries fell 5% MoM and growth moderated after the GX launch.

  Comparison

  Its 4% YoY July growth was below NIO’s 71% but above Li Auto’s -1%.

• Li Auto Inc.

  Covered EV OEM recovering from a pre-launch slowdown.

  Strengths

  L6 and L8 contributed to the recovery in sales.

  Weaknesses

  July deliveries declined 1% both MoM and YoY.

  Comparison

  Its month-on-month decline was smaller than NIO’s and XPeng’s.

• NIO Inc.

  Covered EV OEM affected by post-launch monthly delivery declines.

  Strengths

  July deliveries rose 71% YoY.

  Weaknesses

  Total deliveries fell 11% MoM; ONVO and NIO-branded deliveries fell 14% and 9% MoM, respectively.

  Comparison

  It had the strongest cited YoY growth among the EV trio, despite the sharpest MoM decline.

Key data

• China passenger-vehicle retail sales~15% YoY declineJuly decline cited as the seasonal backdrop for weaker deliveries.
• BYD July deliveries419,211 units+4% MoM and +22% YoY; overseas sales were 180,000 units, up 124% YoY.
• Geely July deliveries250,161 units+4% MoM and +5% YoY; overseas deliveries were 107,000 units, or 43% of total.
• XPeng July deliveries38,027 units-5% MoM and +4% YoY.
• Li Auto July deliveries30,468 units-1% MoM and -1% YoY.
• NIO July deliveries35,934 units-11% MoM and +71% YoY.
• Leapmotor July deliveries101,267 units+8% MoM and +102% YoY.

Impact & implications

The report argues that July’s softness should be assessed as a seasonal demand trough. Its near-term outlook depends on whether new launches, improved supply and overseas demand translate into a sequential sales recovery in August and help selected OEMs protect or expand momentum.

What to watch

• The pace of China auto-sales recovery in August after the seasonal July slowdown.
• Whether new launches, including MONA L03 and BYD’s Sealion 08, Qin MAX and Great Han, translate into volume momentum.
• The contribution of overseas sales and the path of domestic inventory digestion.