Is a life-and-death test coming for the automotive market? The market value of listed car companies has plummeted by 1.1 trillion yuan in half a year.

Why are car sales booming while the market values of car companies are plummeting?

Among the 17 listed car companies, in just half a year, BAIC Motor saw the sharpest decline in market value, dropping by 60%. Haima Automobile came in second with a 55% decline, and Seres ranked third with a 51% decline.

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Changan Automobile, Jianghuai Automobile, and GAC Group all saw declines of over 40%.

Even BYD, the industry leader, saw a 22% decline, with its market value evaporating by 190 billion yuan.

The total market value of the entire industry has shrunk by over 1.1 trillion yuan, equivalent to losing 1.7 BYDs in half a year.

With the market share on the rise but the market value crashing, what on earth is going on with Chinese car companies?

Increasing Revenue but Not Profit

Surely, many people think that after rounds of price wars, car companies are selling cars at a loss.

Is that really the case? Let's take a look at the data first:

Among the gross profit margins of car companies, Seres is the most profitable, with a gross profit margin of 26.2%; XPeng Motors is at 20.6%; BYD is at 18.8%, and Chery Automobile is at 16%. As we can see, the gross profit margins of leading players are indeed quite impressive.

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This shows that the manufacturing and supply chains of Chinese car companies are truly strong. Relying on economies of scale and extreme cost control, they managed to maintain their gross profits during the price wars. If you only look at the gross profit margin, you might think that Chinese car companies are doing well. But do you think that just because the gross profit margin is stable, car companies can make money?

It's not that easy. Among the 17 car companies, only 8 are profitable.

Note: The image has been beautified using AI.

If we replace Xiaomi Group with Xiaomi Automobile, the operating loss in the first quarter was about 3.1 billion yuan, and there were only 7 profitable car companies.

Chery Automobile has the highest net profit margin, reaching 6.6%. The main reason why Chery can achieve high net profit with a low gross profit margin is that its main sales battlefield is overseas, where the overseas market can contribute higher profits. At the same time, the company has also achieved extreme cost control in terms of expenses.

Among the established car companies, such as BYD, Seres, SAIC Group, and Great Wall Motors, the net profit margin is only maintained at around 3%.

The three new - force car companies, NIO, XPeng, and Li Auto, are not making money for now.

The worst - performing in terms of net profit margin are BAIC BluePark and Haima Automobile. It can be said that the company loses money on every car sold.

So, why is the gross profit stable while the net profit is collapsing? Where did the money in between go?

The answer is: It has all been devoured by the "three expenses", namely, selling expenses, administrative expenses, and R & D expenses. In order not to be eliminated in the price war, car companies are pouring money into promotions, expanding sales channels, and investing in advertising. At the same time, in order to tell a good "intelligence" story, R & D investment is also growing rapidly. This has created the most typical dilemma in the Chinese automotive industry currently - increasing revenue but not profit.

Increasing Inventory Turnover Days

Of course, the overall industry sales have declined significantly this year, and the inventory turnover days of car companies have been continuously increasing.

The car companies with the greatest inventory pressure are Haima Automobile, BYD, and XPeng Motors. Their inventory turnover days in the first quarter were 266 days, 111 days, and 103 days respectively.

For mainstream car companies, such as GAC Group, Changan Automobile, Great Wall Motors, Chery Automobile, and SAIC Group, their inventory cycles have increased by about 10 to 20 days.

Geely Automobile, NIO, Li Auto, Jianghuai Automobile, and Seres can be regarded as outstanding players, with their inventory within 40 days.

It is said that 2026 will be a brutal battle for car companies. Which car company do you think will be eliminated? Please leave a message in the comment section.

This article is from the WeChat official account “Car Market Stories” (ID: autostinger), author: Gao Yuhang, published by 36Kr with authorization.