Industry Profits Down 23%, Chery Gross Profit Up 32%: Stop the Involution, Going Global is the Lifesaver

In Q3 2026, the Chinese automotive industry turned in a performance report that keeps everyone on edge. Latest data from the National Bureau of Statistics shows that automotive manufacturing revenue in the first three quarters grew by only 2.6%, total profits fell by 22.8% year-on-year, and the industry-wide profit margin was compressed to 3.3%. The single-month profit margin in September dropped even lower to 1.4%, reaching a four-year low. The upstream continues to drain resources, while the downstream mutually consumes round after round in price wars, crushing single-vehicle profits to just over 1,000 CNY. This is not a reshuffling; it is the profit pool rapidly drying up.

On October 30, Chery (9973.HK) released its first three-quarter financial report, with data that shone particularly bright. Revenue reached 241.234 billion CNY, a 12.29% increase year-on-year; gross profit was 39.004 billion CNY, a significant 32.38% increase year-on-year; gross margin rose from 13.6% to 16.17%; net profit margin was 6.05%. The 32.38% gross profit growth rate outperformed both the 12.29% revenue growth rate and the 10.5% sales volume growth rate simultaneously.

The Logic of Going Overseas Changes: From Selling Cars to Taking Root

When discussing Chery's overseas business, the phrase "Export First" is habitually mentioned. But quantity is just the result; what truly matters is the fundamental logic shift of globalization from trade to local growth.

This year, Chery launched the "Globalization 3.0" strategic upgrade. The core is to front-load organizational capabilities into overseas markets. Barcelona, Spain, activated its first overseas regional operation center, with a research institute launched simultaneously. R&D, manufacturing, supply chain, compliance, and public affairs decision-making powers are front-loaded to the local European region. South Africa acquired the Rosslyn plant, launching a localization plan with a goal of 40% local vehicle production rate before 2028.

This is not selling cars to Africa, but building cars in Africa. It is not a Chinese company doing global business, but attempting to become an enterprise citizen integrated into local regions. According to Dataforce statistics, Chery ranked first among Chinese brands in September in Europe (EU + UK + EFTA). According to UK SMMT data, Chery ranked first in UK new car brand sales for two consecutive months. JAECOO 7 topped the overall vehicle model ranking; in the UK, for every 10 new cars sold, 1 is from Chery.

High-regulation markets are willing to pay, which validates not cheapness, but compliance, safety, channels, and brand passing simultaneously. Pseudo-globalization relying on low prices to expand volume won't work in Europe and America; only those who can take root have the qualification to talk about the next 10 years.

New Energy No Longer Burns Cash to Support Scale

The industry's past unwritten rule: New Energy equals strategic loss. Chery's third-quarter report broke this equation. China Passenger Car Association (CPCA) data indicates that Chery New Energy's monthly wholesale volume ranked in the top three in the industry for 6 consecutive months. Product matrix realization is faster. The new QQ3 broke 10,000 units for 6 consecutive months; pending delivery orders still reach 100,000 vehicles; Luxeed V9 took the sales crown for 150,000 CNY-class pure electric mid-size cars; iCAR V23 globally accumulated over 100,000 vehicles; Zhijie V9 topped the market for MPVs above 400,000 CNY for 4 consecutive months. Multiple categories and price segments gained volume simultaneously, not relying solely on a single hit to endure.

Overseas expansion accelerates simultaneously. OMODA&JAECOO entered 79 markets, with multiple models ranking on the UK top 10 best-seller list; iCAUR V23 topped niche markets in Thailand, Malaysia, Nepal, and South Africa. For every 7 new energy vehicles exported from China, 1 is from Chery. New energy is no longer losing money to make noise, starting to genuinely raise gross profit. The endgame is not who burns more cash, but who runs the economic model first.

R&D Bill: A Mortgage Written for the Future

R&D expenditure in the first three quarters was 11.046 billion CNY, a 40.21% increase year-on-year; the growth rate was 3.3 times the revenue growth rate; the share rose from 3.67% to 4.58%. Funds are directed towards the "Yaoguang 2035" strategy: CheryMind Physical AI Large Model, Xunlong Second Fast Charging (500 km range in 5 minutes), V2G Vehicle-Grid Interaction, Rhino S Solid-state Battery, Ziwei Chip, Robotaxi, eVTOL. Not all are short-term monetization projects. Cars are changing from mechanical products to AI-driven energy terminals; valuation is migrating from manufacturing capability to technical ecosystem.

V2G technology deserves special mention. Charging during valleys and selling during peaks, external emergency power supply; in overseas markets with unstable grids, its commercial value is more direct than in China. Cars are turning from consumer goods into distributed energy storage nodes.

Zhang Guan Commentary: Differentiation Has Already Begun

JPMorgan, Citigroup, CICC, CITIC, and others among 10 domestic and foreign brokerages recently rated Chery highly consistently, with Buy or Outperform industry. The core judgment is the improvement of global system capabilities and new energy economic benefits.

Industry profit margin is 3.3%, Chery is 6.05%, nearly double. Industry profits shrank by 22.8%, while Chery's gross profit increased by 32.38%. What separates them is not luck, but the overseas foundation laid 10 years ago, now earning interest. The next stage differentiation of Chinese automakers does not happen on who can compete more fiercely, but on who can truly survive overseas.