Bernstein: Great Wall Motor’s overseas sales hit a new high in the third quarter, while profits remain under pressure

Why did overseas growth fail to support third-quarter profits?

In the third quarter of 2026, Great Wall Motor’s total sales were 336 thousand vehicles, down 4.9% year on year and up 6.9% quarter on quarter; revenue was 57.77 billion yuan, down 5.7% year on year and up just 1.4% quarter on quarter.
Overseas sales reached 185 thousand vehicles, up 35.2% year on year, and accounted for 54.9% of total sales, up from 51.3% in the second quarter. But domestic retail sales fell 26.0% year on year, and overseas growth mainly served as a buffer.
While sales increased quarter on quarter, the average selling price fell 5.2% to 171.7 thousand yuan. Gross margin fell to 17.3%, below 18.4% a year earlier and 18.3% in the second quarter; net profit was 1.36 billion yuan, down 40.7% year on year and 10.4% quarter on quarter.

Bernstein believes more of the growth came from lower-priced export markets such as Latin America, and quarterly sales were also more heavily weighted toward mass-market brands such as Haval and Ora, potentially making the geographic and product mix unfavorable for average selling prices. Ora’s share of total sales rose from 7% in the second quarter to 10%, while Tank’s fell from 16% to 15%.
The firm believes intensifying overseas competition could lead to more aggressive promotions; company management attributed the pressure on gross margins to intensifying domestic competition and the costs of ramping up new models.

Bernstein expects overseas operations to remain the main driver of earnings growth. The firm estimates that about 80% of Great Wall’s exports are combustion-engine vehicles, which remain eligible for a 13% export VAT rebate; after the company sharply scaled back its European operations in 2024, its sales in the EU are limited, leaving it less exposed to some export policy headwinds.
Uncertainty over Russia’s scrappage tax remains a risk: Eastern and Central Europe, mainly Russia, accounted for 42% of export sales in the third quarter. The company is accelerating local production and diversification in Russia, Brazil, Thailand and Bulgaria; local production currently stands at around 250 thousand–300 thousand vehicles and is expected to increase further in 2027.

Citing weaker domestic demand, Bernstein lowered its revenue forecasts for 2026 and 2027 to 220.1 billion yuan and 222 billion yuan, respectively, 17% and 20% below market consensus.
The firm lowered its earnings-per-share forecasts for 2026 and 2027 from 0.98 yuan and 1.25 yuan to 0.75 yuan and 0.90 yuan, respectively, and cut its Hong Kong share price target from 10 Hong Kong dollars to 7.25 Hong Kong dollars, while maintaining a market-perform rating; its valuation continues to use a forward one-year price-to-earnings multiple of 7 times.