China Auto/EV: Same story for each month in 2Q26 Sequential improvement ahead, but evident recovery unlikely in 2H26

Research evidence excerpt

China Auto/EV: Same story for each month in 2Q26 Sequential improvement ahead, but evident recovery unlikely in 2H26

Global Markets Research

10 July 2026China Auto/EV

EQUITY: AUTOS & AUTO PARTS

Same story for each month in 2Q26 Research Analysts

China Autos & Auto Parts

Sequential improvement ahead, but evident recovery Joel Ying, CFA - NIHK

joel.ying@nomura.comunlikely in 2H26

+852 2252 2153

Three consecutive months with 20%+ domestic market y-y decline in the second Global EV Batteries & Materials

quarter; sequential improvement likely in 2H26F Ethan Zhang - NIHK

The China auto industry ended Jun-26 with 2.4mn wholesale shipments (-5.3% y-y while ethan.zhang@nomura.com

+6.6% m-m); PV retail sales, excluding minivans, were at 1.6mn units (-23.2% y-y while +852 2252 2157

+6.1% m-m), according to CAAM and CPCA, showing a trend similar to that in Apr/May-

26, considering an unexciting domestic market situation. EV outperformed ICE as the

monthly China PV EV retail sales were at 1.0mn units in Jun-26 (-9.3% y-y while +6.0%

m-m), while ICE car retail shipments declined 39% y-y in the domestic China market.

Hence, EV penetration was at 62.3% in the month, keeping an upward trend.

For entire 1H26, China PV wholesale shipments were at 12.7mn, -6.0% y-y, and retail

sales excluding minivan were at 8.7mn, -20.1% y-y, the lowest level since 2020. PV EV

retail sales were at 4.7mn, -13.6% y-y. We reaffirm our view that 2026 would be a

transition period for the China auto industry. After years of intensive price competition (

Fig.5), added with both the government’s anti-involution approach and rising BOM cost

this year, we believe China OEMs have no alternatives but shift from price competition to