How did domestic demand change during the traditional peak season?

  • Chinese automakers released October wholesale data on 1 November. Nomura said that despite the traditional peak sales season, overall orders in October were broadly flat compared with September, with little change in domestic demand.
  • Based on preliminary data from the China Passenger Car Association, Nomura estimates that domestic auto sales fell about 25% year over year in October; the bank believes domestic demand has returned to 2014 levels and maintains a cautious view of the industry.

What supported BYD’s growth?

  • BYD sold 483 thousand passenger vehicles in October, up 10.6% year over year and 5.8% month over month. Nomura attributed the growth to a month-over-month improvement in domestic sales and strong exports.
  • Based on overseas sales of 170.2 thousand vehicles, domestic wholesale volume was 312.9 thousand vehicles, down 11% year over year. The decline narrowed from 14% in September, making it BYD’s best year-over-year performance in the domestic market since 2026. Nomura believes new models equipped with Blade Battery 2.0 were the main driver.
  • BYD exported 1.5 million vehicles in the first 10 months, up 122% year over year; Nomura believes the company is on track to meet its 2026 export target of 1.8 million to 1.9 million vehicles.

Why did sales diverge among other automakers?

  • Geely sold 215 thousand new energy vehicles in October, up 20.9% year over year; Galaxy sales accounted for 153 thousand vehicles, up 20.3%. Leapmotor’s wholesale volume was 106 thousand vehicles, up 51% year over year, reaching 100 thousand vehicles for the fourth consecutive month.
  • XPeng delivered 50.2 thousand vehicles in October, up 19.6% year over year and a monthly record. Nomura said the Mona L03 and exports jointly drove growth; exports that month were 13 thousand vehicles, up 166% year over year. Deliveries of the Mona L05 are scheduled to begin in November.
  • NIO delivered 34.2 thousand vehicles in October, down 15.2% year over year, which Nomura attributed to a smaller order backlog; Li Auto delivered 29 thousand vehicles, down 8.6% year over year. Nomura’s channel checks showed strong initial orders for Li Auto’s new i6, which could help improve its performance in the coming months.

What pressures does the industry face beyond weak demand?

  • Nomura said a tightening policy environment will increase the tax burden: the consumption tax on lithium-ion batteries is 2% from September 2026 to August 2027, then rises to 4%; the impact of changes to export VAT rebates from April 2027 is 4%.
  • The bank also warned that costs for materials such as memory may continue to rise and that export market requirements are becoming more stringent; for example, the EU may restrict exports of hybrid vehicles. Together with weak domestic demand, these factors will create financial and operational challenges for automakers.
  • Nomura believes China’s auto market is entering a shakeout phase, and that more mergers and acquisitions and industry cooperation could help improve market sentiment.