Are car sales increasing while profits are getting thinner? The combined profits of 11 leading automakers can't match those of CATL.

Ask AI · Industry Chain Profits Shift Upstream—How Can Automakers Break the “Revenue Growth Without Profit Growth” Trap?

By | Guo Yifei

Edited by | Yang Buding

After more than three years of relentless price wars, their brutality is increasingly crystallizing into those cold, silent figures in automakers’ financial reports.

Since BYD followed Tesla’s price cuts in 2023, its average selling price per vehicle has been on a steady decline—from 152.7k yuan in 2024 to 119.2k yuan in 2025, while net profit per vehicle has been compressed to 6,200 yuan.

This is not BYD’s problem alone, but a snapshot of the entire Chinese auto industry. In 2025, GAC Group recorded a net loss of 152.7k yuan, marking the first annual loss in its 13-year history since listing. Its explanation was that “last year’s domestic auto market hit ‘a hard cap on total volume, with structural shakeups,’ triggering intense price competition across the industry; the discount magnitude for mainstream models reached a new high in nearly five years, and the end-of-line discount ranges for GAC’s own-brand core models are generally between 15k and 30k yuan.”

Cars are selling more and more, yet profits are getting thinner and thinner—sometimes even turning to losses. Simply relying on “scale expansion” can no longer continue. According to statistics, among 11 listed auto companies that have already disclosed their financial reports in 2025 (BYD, SAIC, Geely, Chery, Great Wall, GAC, Seres, NIO, Li Auto, XPeng, and Leapmotor), their combined attributable net profit was only 119.2k yuan, while Ningde Times’ net profit alone was as high as 8.78B yuan in the same period.

“A battery company’s profits exceed the total profit of 11 leading automakers.” As profits in the new-energy industry chain become increasingly concentrated upstream, automakers are almost reduced to “working-for-the-battery-factory” labor. Behind the collective predicament of “revenue growth without profit growth” are multiple squeezes—price wars, high capital inputs, and imbalances across the industry chain—yet the industry’s elimination race has not played out as expected.

Three years ago, BYD chairman Wang Chuanfu once judged that the auto industry had entered the elimination round, with a window of only 3–5 years. But at a financial-report communication meeting at the end of March 2026, his wording quietly shifted. He admitted that what used to be “three years” now appears to play out in a more moderate way. The auto industry is too big; it involves government and society, and it is unlikely to be resolved entirely through the survival of the fittest. Competition will remain fierce in the future, but it will not be price competition—it will be product competition, and competition will evolve into a higher form and dimension.

In the first quarter of 2026, Geely—after many years—once again surpassed BYD to take the quarterly sales crown among domestic automakers, with the gap between the two at less than 9,000 vehicles.

Now, with the policy of full exemption from the purchase tax rolling back, terminal demand under pressure, and the market overall cooling down, automakers’ competitive focus is starting to shift from domestic “price involution” to a new stage of “protecting market share domestically, earning profits overseas, and raising technical barriers.” This war without smoke is far from over.

A Profit Bind: The Scale Trap of “Revenue Growth Without Profit Growth”

Among the 11 leading listed automakers mentioned above, 9 saw year-on-year growth in revenue, but most had net profit growth that lagged behind revenue growth. As one of the top three private automakers, Great Wall’s “revenue growth without profit growth” performance is especially typical.

According to its financial report, in 2025 its revenue grew 10.2% to 222.28 billion yuan, but its attributable net profit fell 22.1% year over year to 9.87 billion yuan. Its overall gross margin also decreased by 1.47 percentage points year over year, dropping to 18.04%. This divergence is even more clearly reflected in per-vehicle data. Guohai Securities’ calculations say Great Wall’s full-year average selling price per vehicle was 168k yuan, up 4k yuan year over year—seemingly an upgrade in product mix. But its attributable net profit per vehicle was 7.5k yuan, down 3k yuan year over year, showing a significant decline in profitability efficiency.

Looking deeper, selling expenses surged 43.9% to 11.27 billion yuan, becoming the primary factor dragging Great Wall’s profits down. Since 2024, under the leadership of chairman Wei Jianjun, Great Wall has been breaking away from the traditional dealer model, aggressively building out “Great Wall Smart Selection” direct-sale stores to support its high-end branding strategy—especially the revival of the Wey brand. Wei Jianjun previously revealed that the company has invested more than 2 billion yuan in its direct-store system to date.

At the same time, affected by weak market demand such as in Russia, Great Wall’s export business profitability weakened. Its gross margin fell 2.06 percentage points year over year to 16.7%, even below the gross margin of its domestic business (18.61%), meaning overseas business contributed less support to profitability.

Seres is similar. Powered strongly by Huawei, this edge-of-market automaker rapidly rose to prominence with its “AITO” lineup. In 2024 it returned to profitability, with net profit reaching as high as 15k yuan at one point. In 2025, AITO sold 426k vehicles, with an average selling price per vehicle of 391k yuan and its gross margin rising to 29.1%. Despite selling nearly 40k more vehicles than the prior year, its full-year attributable net profit was only 30k yuan, basically flat versus 2024—showing fatigue in profit growth.

From the financial report, Seres saw a substantial increase in its three-expense categories last year. Sales, management, and R&D expenses increased 26.1%, 35%, and 42.4% year over year, respectively. In addition, it also recognized a one-time impairment of 71.6B yuan near year-end. These factors together pulled down the company’s net profit.

What’s worth noting is that in 2025, Seres’ related-party transaction with Huawei’s Shenzhen Invincible Vision—purchasing goods and accepting services—amounted to 72.2B yuan, nearly four times its net profit. More importantly, when Huawei’s Harmony OS cockpit and ADS intelligent driving were no longer exclusive, and when Huawei Qian Kun personally stepped in to hope to build another “Harmony Zhixing” “Five Realms,” crowding the premium-market models even further, whether Seres can keep progressing relying on the AITO brand remains a major question.

Meanwhile, whether it is Great Wall or Seres, this highlights a common industry challenge: the sacrifice of short-term profitability for huge upfront strategic investment—but can these investments truly become a moat that delivers profit across the cycle?

Given the current competitive landscape, BYD’s annual report judged that “against the backdrop of accelerating the pace of the replacement between new and old (products), market games are unusually intense, and price competition is intensifying. Overmarketing has become frequent, and industry profit space is being squeezed.”

The inevitable result is that overall industry profitability declines. Data from the National Bureau of Statistics show that in 2025 the domestic auto industry’s sales profit margin was 4.1%, down another 0.2 percentage points year over year, hitting the lowest level in history. By the first months of 2026, the profit margin further slid to 2.9%.

Sustained Overseas Blowout: The “Must-Do” Questions to Avoid Involution and Thicken Profits

Under these circumstances, overseas export business became one of the few performance highlights in 2025 that could still look respectable.

According to data provided by Cui Dongshu, secretary-general of the CPCA, last year China exported 8.32 million vehicles, up 30% year over year. Among them, exports of new-energy vehicles were 3.43 million, up 70% year over year—far faster than the 16% growth rate for all of 2024.

In 2025, BYD sold more than 4.6 million vehicles, taking the crown again as China’s top automaker, top brand, and global new-energy sales champion. But among this, domestic sales declined 8% year over year to 168k vehicles. By contrast, overseas sales first broke the one-million-vehicle mark, rising 145% year over year to 1.0496 million, with its share increasing to 22.7%.

The financial report shows that BYD’s overseas revenue share last year rose sharply by 10.1 percentage points, and its gross margin was also 2.8 percentage points higher than in China. Especially in the second half of the year, BYD’s overseas models sold at an average price of 186k yuan—well above the 127k yuan average selling price in China during the same period—effectively offsetting the profit losses caused by the domestic price war.

Wang Chuanfu also said that overseas markets are not as “involuted” as in China; overseas prices and gross margins are comparatively better. BYD’s export target for 2026 is 1.5 million vehicles, and it could even be higher. In the future, it hopes to achieve a 50/50 split between domestic and overseas market shares.

Chery, the “export leader,” is also the same. In 2025, its domestic retail volume grew only 1% year over year, while overseas jumped 33.2% to 1.2944 million vehicles. Overseas accounted for 49.2% of total sales. Its overseas business also reached a revenue share of 52.4%.

Geely, an automaker pursuing BYD domestically, saw total sales growth of nearly 40% in 2025, but export sales grew only 1% year over year to 420k vehicles. In 2026, its sales target is 640k vehicles, representing a year-on-year increase of more than 50%. A forecast by Morgan Stanley calculates that its profit per vehicle in overseas markets may reach 13,000 to 15k yuan—about three times that of the domestic market.

CITIC Securities points out that the growth in the previous wave of “going abroad” mainly came from market substitution in countries such as Russia. In 2023 alone, the former Soviet region had nearly 1 million vehicles added in sales growth. But relying on a single market makes results highly volatile. As the Russia auto market weakened and vehicle scrappage tax implementation began, sales in 2024–2025 faced clear pressure. Russia’s market sales fell 18%, while growth in regions including the EU, Latin America, the Middle East, Southeast Asia, and Africa was around 50%. Overall export growth in 2025 was 29.9%, and in developed overseas countries the average selling price and net profit per vehicle can reach 2–3 times those in China.

The research report concludes that “in 2026, exports becoming a must-do task for automakers to avoid involution and thicken profits.”

Especially with current Middle East tensions pushing oil prices upward and further strengthening the economics of new-energy vehicles, Chinese automakers are entering a rare window of overseas opportunity. However, tariff barriers and thresholds such as local production and manufacturing all test each automaker’s capability for global operations.

In the first quarter of 2026, the competition in the overseas sales ranking race remains intense, and everyone is making aggressive strides. Among them, Chery, SAIC, and BYD all exceeded the 300k-vehicle mark: 4k units, 7.5k units, and 3k units, respectively; Geely also reversed its slump, with sales up 126% to 5.95B vehicles.