"Big Banks" UBS: The Chinese automotive industry aims for high growth, with exports and intelligence becoming the future keys

UBS stated at the 2026 Greater China Conference that although the Chinese automotive industry has set an average sales growth target of 19%, the industry may still face some challenges in domestic demand and profit margins due to reduced stimulus measures, increased purchase taxes, and rising commodity prices. UBS recommends that investors focus on companies with overseas market expansion capabilities and advantages in intelligent technology.

As China approaches a minimum price agreement for electric vehicles with the European Union, Canada has also reduced tariffs on Chinese electric vehicles to 6.1%, making the export market an important driver of industry growth. Great Wall Motor (02333.HK) plans to export 600,000 vehicles in 2026, Heavy Truck (03808.HK) is looking to expand into the Brazilian and European markets, while Chunfeng Power (603129.SH) is focusing on the motorcycle sector in North America and Europe.

In addition, the transformation towards intelligence is also driving industry change. Pony AI (02026.HK) and WeRide (00800.HK) plan to add more than 2,000 Robotaxis; Minth Group (00425.HK) is focusing on the development of robotic components and AI server liquid cooling technology.

UBS pointed out that exports and technological innovation will be the core driving forces for the future development of the Chinese automotive industry, and breakthroughs in these two areas will determine companies' competitive positions in the global market.

The bank is optimistic about autonomous driving solution providers WeRide and Pony AI, lidar manufacturer Hesai (02525.HK), and diesel engine manufacturer Yuchai International (CYD.US), which benefits from the growing demand for backup power in artificial intelligence data centers.

On the other hand, in terms of export themes, it prefers vehicle manufacturers BYD (01211.HK) and Great Wall Motor, which have significant layouts in the global market, as well as leading exporters in the motorcycle and commercial vehicle sectors such as Loncin General (603766.SH), Chunfeng Power, and China National Heavy Duty Truck Group