Geely: Can it challenge BYD's dominance by going head - to - head?

Geely Auto released its semi - annual report for 2025 during the mid - day trading session of the Hong Kong stock market at 14:00 on August 14, 2025, Beijing time. Let's look at the key points:

1. Automobile sales revenue slightly exceeded expectations, but the overall average selling price of cars is still declining year - on - year: In the first half of 2025 (1H25), Geely's automobile sales revenue reached 134.6 billion yuan, a year - on - year increase of 27%, slightly exceeding the market expectation of 133.2 billion yuan.

However, Geely's overall average selling price of cars is still declining year - on - year. The average selling price of cars dropped from 110,000 yuan in 1H24 to 96,000 yuan in 1H25, mainly due to:

① The downward shift of the vehicle model structure, and the lackluster sales performance of Geely's high - end series: The mid - to high - end models Zeekr and Lynk & Co. in Geely's vehicle model structure still performed mediocrely. The year - on - year growth rate of Zeekr + Lynk & Co. slowed down, and their proportion in the model structure decreased by 5 percentage points compared with the previous period. The main incremental contribution still came from the low - priced Geely series.

② The continuous decline of the average selling price of cars: Judging from the performance of the three brands, the average selling price of Zeekr cars in 1H25 dropped from 246,000 yuan to 230,000 yuan, a year - on - year decrease of 16,000 yuan. The average selling price of Lynk & Co. cars in 1H25 was 137,000 yuan, remaining flat year - on - year. The overall average selling price of Geely cars dropped from 89,000 yuan to 80,000 yuan, a year - on - year decrease of only 10,000 yuan, mainly due to the increased proportion of the low - priced Geely Wish series (comparable to BYD Seagull models).

2. However, the overall gross profit margin basically met expectations due to the release of economies of scale: Geely's gross profit margin in 1H25 was 16.4%. When the average selling price of cars decreased significantly year - on - year, the gross profit margin only decreased by 0.3 percentage points year - on - year, which also basically met expectations. This was mainly due to the release of economies of scale brought about by the sequential increase in car sales volume (car sales volume increased by 47% year - on - year), and the fixed amortization cost per vehicle was still decreasing sequentially.

3. The core operating profit increased year - on - year, and the cost control was reasonable after the integration of "One Geely": From the perspective of core operating profit (gross profit - three major expenses - SBC expenses), the core profit margin increased by 2.3 percentage points sequentially to 3.6%, mainly due to reasonable cost control after the integration of "One Geely" and the release of the leverage effect of sales volume.

4. The year - on - year decline in net profit was mainly due to the recognition of one - time gains from the sale of subsidiaries in the same period last year, which is not a big problem: In 1H25, the net profit decreased by - 10% year - on - year to 9.5 billion yuan, mainly because there was a one - time gain of nearly 7.5 billion yuan from the sale of subsidiaries recognized in 1H24, resulting in a high base.

5. The net profit per vehicle in the second quarter decreased sequentially, mainly due to the reduction in the recognition of exchange gains and losses. The core operating profit per vehicle was basically flat compared with the first quarter: The net profit per vehicle in the second quarter was 5,000 yuan, a decrease of 3,000 yuan compared with 8,000 yuan in the previous quarter, mainly due to the reduction in the recognition of exchange gains and losses. The core operating profit per vehicle was 4,000 yuan, which was basically flat compared with the first quarter.

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Dolphin Jun's Viewpoint

Overall, Geely still performed well in the process of car sales in the first half of the year. In the first half of 2025, Geely's overall sales volume reached 1.41 million vehicles, a year - on - year increase of 47%, mainly due to the large - scale sales of Geely's low - end models (Geely's sales volume increased by 57% year - on - year). As a result, the management raised the sales target for 2025 from the previous 2.71 million vehicles to 3 million vehicles in 2025.

In terms of the most critical new energy transformation speed, Geely has been steadily advancing. In 1H25, the proportion of new energy vehicles reached 51%, a year - on - year increase of 17 percentage points. In the second quarter, the proportion of new energy vehicles exceeded half, reaching 55%, an increase of 7 percentage points compared with the first quarter.

The acceleration of Geely's new energy transformation still mainly benefits from the large - scale sales of Geely's mid - to low - end Wish + Galaxy series, which also benefits from Geely's "close combat" with BYD:

a) Switching to a new technical solution to reduce costs: By reducing the plug - in hybrid technology route from the original three - speed DHT solution to a single - speed DHT solution (which can reduce costs by about 5,000 yuan) and reducing the engine horsepower. In essence, Geely's original solution was more suitable for all - scenario vehicle use (especially having an advantage in high - speed scenarios). However, most users in the 70,000 - 150,000 yuan price range mainly use their cars in urban areas and are cost - effective oriented. So Geely made such a change.

b) BYD's price war is restricted by the "anti - involution" policy, giving Geely a competitive window period: The large - scale sales of Geely's Wish + Galaxy series, which are comparable to BYD models, are not only due to the catch - up on the technical side and cost reduction through switching technical solutions, but also mainly because BYD's price war is restricted by the "anti - involution" policy, and the price war has slowed down, giving Geely a competitive window period.

c) Integration for efficiency improvement: Previously, Geely had too many sub - brands, resulting in serious resource waste and internal strife. This integration is actually to reduce sales costs, and more importantly, to strictly control the three major expenses.

After the merger of Zeekr and Lynk & Co., the management expense ratio in 1H25 dropped to 1.9%, the sales expense ratio dropped to 5.5%, and the R & D investment was 8.3 billion yuan (an 8.8% year - on - year decrease).

Judging from the new model launch speed of the three brands in the second half of the year, since Zeekr's models in the second half of the year follow a high - end route and are obviously not volume - oriented models, the main force for Geely's sales growth in the second half of the year will still be the Galaxy series (Galaxy A7, Galaxy M9) and Lynk & Co. 10.

Dolphin Jun expects that with ① the rush to purchase before the reduction of the vehicle purchase tax next year, ② the continued large - scale sales of Geely's new models, and ③ the slowdown of BYD's competition, it is highly likely that Geely will achieve the sales target of 3 million vehicles.

If the sales volume is estimated to be 3 million vehicles, the P/E ratio of the current stock price in 2025 is about 12 times, and the valuation is relatively reasonable.

This article is from the WeChat official account "Dolphin Investment Research" (ID: haituntouyan). Author: Dolphin Jun. It is published by 36Kr with authorization.