China Auto Sector: Takeaways from the UBS China EV & AD flagship tour

Research evidence excerpt

China Auto Sector: Takeaways from the UBS China EV & AD flagship tour

Global Research

6 July 2026ab

China Auto Sector Equities

ChinaTakeaways from the UBS China EV & AD flagship

tour Industrial Goods & Services

Paul Gong

Analyst

paul.gong@ubs.com

Concluding one-week tour with 21 meetings +852-2971 7868

We met 21 companies and industry professionals during a one-week tour across Beijing, Wei Shen

Shanghai, Hangzhou, Guangzhou and Shenzhen. Against a backdrop of a weak Analyst

domestic car market and poor sector share-price performance, we were not surprised to S1460518060001

be reminded of the multiple challenges currently facing the industry, including weak wei.shen@ubs.com

domestic demand, commodity cost pressure and fierce competition, by the various +86-21-3866 8897

companies we visited. However, companies are still identifying growth drivers, including: Nora Min

1) new model launches, which we see as largely zero-sum for the industry; 2) overseas Analyst

sales, which can generate decent profits but carry geopolitical risk; and 3) humanoid S1460518050001

robotics and other physical AI applications, where we see potential, albeit with greater nora.min@ubs.com

uncertainty. After the recent correction in sector share prices, we are turning more +86-21-3866 8905

constructive on the sector and see buying opportunities in some high-quality names. Xinyu Fang, CFA

Challenges persist but are also evolving xinyu.fang@ubs.com

+852-2971 8007Domestic demand weakened further in Q2, especially for ICE vehicles, and companies

like Geely are destocking channel inventories. Competition remains fierce, but under Jenny Wang

“anti-involution” policies it has shifted from straightforward pricing to intensive new Analyst

model launches.