Ge Long Hui·2025-06-04 18:21Core Viewpoint - The automotive market in China is experiencing a severe price war, leading to significant declines in stock prices and market capitalization for automotive companies, with a total market value loss of nearly 660 billion yuan, dropping to 8.8 trillion yuan [2][4]. Industry Summary - The average stock price of 88 listed Chinese automotive companies fell by 2.41% in the last trading week of May, ending a three-week rally [2]. - The profit margin for the automotive industry is projected to be only 4.3% in 2024, which is below the overall profit margin for downstream industries, and it further decreased to 3.9% in the first quarter of this year [2]. - The Ministry of Industry and Information Technology supports initiatives to maintain fair competition and address the "involution" in the automotive industry, emphasizing the need for a healthy market environment [2]. Company Performance - In May, the overall performance of automotive stocks showed a narrowing of gains followed by a sharp decline, with only about 20% of automotive stocks showing positive returns [4]. - Notable gainers included Zhengtong Automotive, Jinlong Automotive, and Xiaoma Zhixing, with respective increases of 21.85%, 11.97%, and 10.63% [5]. - Zhengtong Automotive's stock surged due to a takeover offer from Xinda Automotive (Hong Kong) at a 25% premium, with the company reporting a loss of 1.529 billion yuan for the 2024 fiscal year [6][8]. Stock Price Movements - The stock price of BYD dropped by 15.56%, leading the declines among major automotive companies, with other companies like Geely and Leap Motor also experiencing significant losses [9][10]. - The market capitalization of BYD alone evaporated by over 350 billion yuan within a week, reflecting the harsh realities of the ongoing price war [10]. Market Trends - The automotive industry is facing a critical juncture, with companies needing to choose between prioritizing sales or profitability amidst fierce competition [10]. - The latest sales figures are under scrutiny, prompting companies to consider long-term strategies to withstand market pressures [10].