China Auto/EV: Quick Note

Research evidence excerpt

China Auto/EV: Quick Note

Global Markets Research

1 July 2026China Auto/EV

EQUITY: AUTOS & AUTO PARTS

Little change in Jun-26; we reaffirm 2026 to be a transition year for China auto Research Analysts

China Autos & Auto Parts

Joel Ying, CFA - NIHKQuick Note joel.ying@nomura.com

+852 2252 2153

Policy and macro environment forcing changes in the China auto sector; shipment

fluctuations in 2026 may pave the way for improving the quality of growth (rather Global EV Batteries & Materials

than simply quantity growth) in the long run Ethan Zhang - NIHK

China auto OEMs released their Jun-26 wholesales data on 1 July 2026. The official ethan.zhang@nomura.com

wholesales data and the order situation based on our industry checks indicate that the +852 2252 2157

overall market trend in Jun-26 remained broadly similar to those of the past few months,

including: (1) muted local demand, (2) continued outperformance by EVs vs ICE vehicles,

and (3) exports supporting the entire China auto industry. For the China auto market, we

estimate, local demand experienced another month of decline in Jun-26 (down around

20% y-y), while EV penetration deepened further sequentially.

Given the anti-involution tone set by the government (and therefore policy tightening

around subsidies), we continue to believe that 2026 will mark a transformation year for

China’s auto industry. On one hand, we see a shift from impulse buying to reason-driven

consumption on the consumer side. On the other, market players are shifting from price

competition to technology/quality competition with brand recognition. Both phenomena are

likely to pave the way for healthier (higher quality rather than quantity) auto market

development in the long run, in our view, but also leave 2026 as an adjustment period.