Xiaomo: Chinese car companies continue to prefer Chery as their share of the European passenger car market rises to 12%, and the expansion trend continues to prefer Chery (09973)

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that China's automobile export tracking continues to show that the overseas momentum of Chinese car companies is resilient. The share of Chinese brands in the European passenger car registration market rose to a new high of 12% in August, accounting for about 10% in the first eight months of this year, compared with 6% in 2025; the NEV market accounted for about 21% in August, 19% in the first eight months, up from 12% in 2025. According to the latest registration data, the increase in market share is becoming more extensive, covering more Chinese automakers, while leading exporters continue to develop differentiated regional and localization strategies.

The bank pointed out that the penetration rate of electric vehicles plus plug-in hybrids rose to a new high of 39% in August, and sales of electric vehicles plus plug-in hybrids increased 53% year on year. Overall passenger car sales increased by only 6% year on year. The penetration rate since the beginning of the year has risen to 32%, compared to 26% in 2025. In contrast, China's penetration rate in August was still as high as 65%, and 57% since the beginning of the year; the US has generally stagnated at 7%.

The bank believes that the acceleration of electrification in Europe is beneficial to Chinese car companies because of its strong positioning in pure electric and plug-in hybrid systems, and there is still a clear penetration gap compared to China, indicating that there is still room for growth in electrification.

According to the bank, the NEV market share increased beyond BYD shares (01211), and Chery Auto (09973) became another important contributor. BYD is still the largest Chinese NEV company in Europe, accounting for 7.6% in August, 7.5% in the first eight months, compared with 4.9% in 2025; Chery's three brands, Chery, JAECOO and OMODA, together accounted for 3.6% of the August market, 3.5% in the first eight months, compared to 1.6% in 2025; Zero Sports (09863) market share rose from 0.9% in 2025 to 2.4% in the first eight months of this year; Xiaopeng Group-W (09868) and Geely (00175) continued to rise from a lower base.

Faced with a more challenging domestic and policy background, the bank maintains a selective approach to the industry, favoring automakers with sustainable market share and overseas scale and localization capabilities, and uses Chery as the first choice for Chinese passenger car OEMs, with a rating of “increase in holdings”. The target price is HK$35. Supporting factors include differentiated overseas business, local-to-local strategies, and attractive valuations. The bank indicates that Chery's overseas production capacity (including its own, joint venture and contract production capacity) is expected to reach about 800,000 vehicles in 2027, which is equivalent to about one-third of the total production capacity, which will help regionalized production and deal with trade barriers such as tariffs and local content requirements.