In June, China's passenger car market sales reached a historic high, but fierce price competition is intensifying. Who will cut prices the most?
On July 10, according to news from the Chasing Wind Trading Platform, UBS Group stated in its latest research report that the Chinese passenger car market set a new record in June, with wholesale sales reaching 2.5 million units, a year-on-year increase of 15%, but pricing pressure continues to escalate.
The report states that in the fierce competition, Geely, XPeng, and Leapmotor's discount rates exceed those of BYD, and the price war is becoming increasingly intense.
UBS noted that this trend will directly impact the profitability and stock price performance of various automakers, especially under the anti-involution policies, and who can stop the price war first will become the focus of market attention.
<h2>Sales Reach Historic High, Policy Stimulus Effective</h2>
The UBS report states that in June, the Chinese passenger car market set a new historical record, with wholesale, retail, and production all reaching monthly highs.
According to data from the China Passenger Car Association, wholesale sales in June rose to 2.5 million units, a year-on-year increase of 15% and a month-on-month increase of 8%. Retail deliveries were strong, reaching 2.1 million units, a year-on-year increase of 18% and a month-on-month increase of 8%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a82c884a-3d93-4543-898a-c0beb6d099f5.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a82c884a-3d93-4543-898a-c0beb6d099f5.png"/>
Production also accelerated, with a year-on-year increase of 13% and a month-on-month increase of 6%. Exports also reached a new high, totaling 480,000 units, a year-on-year increase of 28% and a month-on-month increase of 7%.
UBS stated that this impressive performance is mainly attributed to the trade-in policy and the increasing purchase incentives offered by automakers to customers. The dealer inventory index report shows that in June it was 1.42 months, slightly up from 1.38 months in May.
<h2>Price War Intensifies, Geely, XPeng, and Leapmotor Cut Prices More Aggressively</h2>
The report points out that against the backdrop of intensified competition, retail discounts across brands generally expanded in June. The price cuts of Geely, XPeng, and Leapmotor exceeded those of industry leader BYD.
UBS stated that BYD announced a new round of price cuts on May 23 and recorded an additional pricing discount of 0.6 percentage points, but trading price data shows that competitors' price cuts are more aggressive. Specifically:
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Geely's retail discount expanded by 3.1 percentage points, with the Geely E5, Xingjian 7, and Xingyuan being among the models with the largest discount increases for the month.
XPeng's G6, P7+, and Mona M03 also saw significant retail discount increases, recording a 3.5 percentage point increase in June.
Leapmotor's retail discount expanded by 1.2 percentage points, with the C01, C11, and C16 models all increasing their discount rates.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b8d991cb-2642-4dde-9cbc-9bf2072a5dee.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b8d991cb-2642-4dde-9cbc-9bf2072a5dee.png"/>
</blockquote>
UBS noted that after BYD reduced retail incentives on July 1, the market is closely watching whether competitors will also pause the price war
If the price competition temporarily eases under the government's anti-involution policy, investor sentiment and stock performance may be positively impacted, especially considering that the current market sentiment for BYD is quite negative.
<h2>Steady Increase in New Energy Vehicle Penetration Rate</h2>
It is noteworthy that in China's June automobile sales data, new energy vehicles continued to maintain strong growth momentum.
In June, the wholesale sales of new energy vehicles reached 1.24 million units, a year-on-year increase of 27%, and remained basically flat month-on-month. The penetration rate of electric vehicles remained high at 50% for the month, bringing the penetration rate of electric vehicles in the first half of 2025 to 48%, an increase of 9 percentage points year-on-year.
In the first half of 2025, the sales growth of pure electric vehicles was twice that of plug-in hybrid vehicles and range-extended electric vehicles.
From the perspective of automakers, BYD achieved a 30% market share in China's new energy vehicle market, with sales of 378,000 units in June (including 207,000 pure electric vehicles and 171,000 plug-in hybrid vehicles), a year-on-year increase of 11%, and remained basically flat month-on-month. Tesla reported sales of 72,000 units (including 10,000 for export and 61,000 for domestic sales), a month-on-month increase of 16%, and remained basically flat year-on-year.
Benefiting from the strong development momentum of electric vehicles, Chinese brands increased their market share by 2.2 percentage points in that month, while European and Japanese brands decreased by 1.6 percentage points and 1.1 percentage points, respectively

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UBS stated that in the context of intensified competition, retail discounts for various brands generally widened in June. The price cuts for Geely, XPeng, and Leapmotor all exceeded those of industry leader BYD. BYD recorded an additional pricing discount of 0.6 percentage points in June, Geely's retail discount widened by 3.1 percentage points, XPeng saw a discount increase of 3.5 percentage points, and Leapmotor's retail discount expanded by 1.2 percentage points

- In June, China's passenger car market reached a record high with wholesale sales of 2.5 million vehicles, a 15% year-on-year increase, driven by policies encouraging trade-ins and dealer incentives.  
- However, intense price competition has emerged, with brands like Geely, Xpeng, and Leap Motor offering deeper discounts than industry leader BYD, impacting profitability and stock performance.  
- Meanwhile, the penetration rate of new energy vehicles continued to rise, with wholesale sales reaching 1.24 million units, reflecting a 27% increase year-on-year.

Price war among car manufacturers, who has the steepest price cut?