Bernstein: Geely’s overseas sales underpin third-quarter growth as lower tax rebates pressure earnings forecasts

How did overseas expansion support third-quarter growth?

In the third quarter of 2026, Geely recorded revenue of 99 billion yuan, up 10.3% year on year and 10.2% quarter on quarter; deliveries totaled about 813 thousand vehicles, up 6.8% year on year and 14.0% quarter on quarter.
Of these, overseas deliveries totaled about 323 thousand vehicles, up 188.8% year on year, and accounted for 39.8% of total sales, above 14.7% a year earlier and 37.9% in the second quarter. Domestic deliveries fell 24.6% year on year but rose 10.4% quarter on quarter; overseas growth was therefore key to offsetting domestic weakness.

Bernstein estimates that the blended average selling price in the third quarter was 111 thousand yuan, up about 4% year on year but down about 4% quarter on quarter. The mass-market Galaxy brand accounted for 44% of sales, up from 40% in the second quarter; Zeekr remained at 14%, but its mix shifted toward fewer sales of the higher-priced, higher-margin 8X and 9X models.
The third-quarter gross margin was 18.0%, higher than 16.5% a year earlier but below 18.4% in the second quarter; the net margin was 4.9%, above 4.1% a year earlier but below 5.5% in the second quarter. Net profit was about 4.8 billion yuan, down 2.3% quarter on quarter; net profit per vehicle was about 6700 yuan, below 6900 yuan in the second quarter.
The company also continues to invest in research and development: R&D spending in the first three quarters was 14.4 billion yuan, up 23% year on year; third-quarter R&D spending was about 5.2 billion yuan, or 5.3% of revenue, above 5.2% in the second quarter.

Management raised its 2026 overseas sales guidance to 1 million vehicles from the 750 thousand vehicles proposed in April, and reiterated its target of 2 million overseas sales in 2028. Bernstein expects overseas sales to exceed 1.1 million vehicles in 2026 and reach 1.5 million in 2027.
Bernstein believes a multi-powertrain strategy and local distribution partners support overseas expansion, while Zeekr’s global expansion also offers room for growth. However, because government subsidies have pulled demand forward and purchase taxes on electric vehicles are rising, the firm expects domestic sales to be broadly flat in 2026 and 2027, at about 2 million vehicles in each year.

Bernstein raised its revenue forecasts for 2026 and 2027 to 402.8 billion yuan and 482.2 billion yuan, respectively, increases of 3% and 18% from its previous forecasts. The new estimates are 2% below and 1% above market consensus, respectively.
Earnings face policy pressure: the VAT rebate rate for new-energy vehicle exports is expected to fall from 13% to 9% starting in April 2027, while EU restrictions on imports of Chinese hybrid vehicles are also tightening. Bernstein cut its earnings forecasts mainly because of the rebate adjustment, lowering its 2027 earnings-per-share estimate from 2.29 yuan to 2.06 yuan, 14% below market consensus.
The firm maintained its one-year forward price-to-earnings multiple of 10 times and its “Outperform” rating, while cutting its target price from HK$25 to HK$22.50. Its revenue and earnings forecasts indicate that higher export volumes can expand revenue, but policy changes will squeeze the portion that can be converted into profit.