After regaining the title of "the leading independent brand," Geely recalculates the accounts.

```

Author | Zhou Zhiyu

According to data from the National Bureau of Statistics, in the first quarter of 2026, the sales profit margin of China’s automobile industry fell to 3.2%, reaching a historical low.

The situation where automakers are being squeezed at both ends became especially evident in the first quarter: bulk raw materials collectively became more expensive, with upstream taking away profits, but new energy vehicle purchase tax shifted from exemption to half-levy, putting pressure on the retail end, while downstream car companies could no longer withstand the price war.

In this quarter, Geely surpassed BYD with 709,000 units sold, reclaiming the sales champion among domestic brands. But the real value of this title is not in the sales volume—year-on-year, it only increased by 1%. What truly stands out are two other numbers. According to Geely’s Q1 report announced on April 29, its revenue increased by 15% and core profit by 31% in the same period.

The number of cars sold barely increased, yet profits jumped by nearly a third. In a quarter where the whole industry was losing blood, Geely’s cars became more valuable per unit. How are these figures calculated, and whether this trend can continue, are the most worth examining in this quarterly report.

The Account Got Thicker

Headline net profit dropped by 27% year-on-year, from 5.67 billion to 4.17 billion yuan. This figure is alarming, but not accurate.

This first quarter, automakers with higher shares of overseas revenue were generally affected by exchange rate gains and losses. Geely was no exception; in Q1 2025 it had 3.03 billion in foreign exchange gains, but in 2026 lost 500 million. Excluding exchange rate fluctuations, core profit was 4.56 billion, up 31% year-on-year.

709,000 units vs 704,000 units: only 5,000 more cars sold. Yet revenue increased by 11.1 billion yuan.

Where did the money come from?

Geely CFO Dai Yong, at the April 29 earnings conference, broke down the number. Excluding parts and technology licensing revenue, the average selling price (ASP) per vehicle rose from 94,000 in Q1 last year to 112,000 yuan, an 18.3% increase year-on-year. Each car sold for nearly 20,000 yuan more.

Zeekr was the main force driving up ASP. The brand’s overall ASP rose from 281,000 to 295,000 yuan. The flagship 9X’s average transaction price was 530,000 yuan, and for five consecutive months, it was the sales champion in the 500,000-level luxury SUV segment. The Zeekr 8X, launched on April 17, received over 10,000 firm orders in 29 minutes, with an average price exceeding 400,000 yuan per vehicle.

Exports are another force. In the first quarter, 203,000 units were exported, up 126% year-on-year, hitting a new record with over 80,000 units in March alone. The export ranking rose from fifth to third among Chinese car companies. The gross margin of exported vehicles is more than 10 percentage points higher than the domestic average.

Going premium pulls upward, going overseas pulls outward, and together these forces drove revenue growth to 15 times the growth rate of sales volume.

Market share is also expanding against the trend. Industry-wide new energy vehicle retail sales fell by 24% year-on-year in Q1 2026, while Geely’s new energy vehicle sales rose by 9%, and market share increased to 13.39%. In the fuel vehicle segment, the industry shrank by 20%, but Geely’s share increased from 10.37% in Q1 2025 to 10.71% in Q1 2026. Winning on both fronts.

For the past two years, the market questioned Geely’s heavy reliance on fuel vehicles. But with the reduction of purchase tax benefits, diversification turned out to be a buffer. Pure new energy companies were hit by policy shifts, while Geely maintained its base with fuel vehicles and drove growth through new energy and exports.

Gross margin increased from 15.7% in Q1 2025 to 17.5% in Q1 2026, a gain of nearly two percentage points.

But more noteworthy than the gross margin is another figure.

Dai Yong revealed at the earnings meeting that the proportion of R&D expenses expensed in Q1 increased from 28.5% in the same period last year to 44%. This means more R&D spending is directly recognized as current expenses, reducing profit. He calculated that if last year’s ratio was maintained, core profit would exceed 5 billion yuan.

Geely’s capitalization rate has long been questioned by investors. In 2018, the expense ratio was only 5%, meaning 95% of R&D spending was capitalized. In recent years, it’s been adjusted upward: 36% for all of 2025, and directly up to 44% in Q1 this year. Proactively increasing the expensing ratio demonstrates strong operations.

Total R&D investment did not swell because of the increased expensing ratio. In Q1, R&D expenditure was 4.47 billion yuan, actually down 4.9% year-on-year, and down 38.2% quarter-on-quarter. The R&D share of revenue dropped from 6.4% last year to 5.3%. Dai Yong says that’s a synergy effect after Geely’s “integration into one” — brands sharing technical architecture, achieving more for less. Administrative expense ratio fell to 1.6%, which he claims is “probably the best in the industry.”

Cost pressures remain. Copper, aluminum, lithium carbonate, and chips are all rising. Dai Yong pointed out a negative impact of around 2,000 yuan per vehicle, but cost cuts achieved about 80% of the target, basically offsetting the increase. Supplier payment turnover also improved: accounts payable turnover days dropped from 110 days in Q1 2025 to 78 days in Q4 of the same year.

At the end of April 2026, Cui Dongshu, Secretary-General of the China Passenger Car Association, provided an industry comparison: Q1 auto production was 7.15 million units, down 6% year-on-year; revenue slightly down; costs up; and profits squeezed from both sides.

Against this backdrop, Geely’s gross margin expanded by two percentage points and core net profit margin reached 5.4% in Q1 2026, a significant gap versus the industry average of 3.2%.

Going Overseas Is Key

Geely Auto Holdings CEO Gui Shengyue said at the April 29 earnings conference, “The record high core profit in the first quarter is just the beginning.”

This isn’t just polite talk. The engines driving profit growth in Q1 — Zeekr’s premiumization and export expansion — are both still at early stages, and the most premium products haven’t been exported yet.

Zeekr 9X averages 530,000 yuan per unit, 8X averages over 400,000 yuan. Both are currently sold only in China. Geely Auto Group CEO Gan Jiayue gave a timeline at the earnings meeting: the 9X will begin exports to the Middle East at the end of June and to Europe in September. The 8X will enter overseas markets in Q4 or early next year.

Overseas pricing? Gan Jiayue did not give specific numbers but said gross margins “will definitely be higher than in China, and considerably higher.” Currently, Geely’s export gross margin averages over 10 percentage points higher than domestic; Zeekr’s premium will be even greater.

There was a detail at the Beijing Auto Show. International tuning brand Mansory independently purchased a Zeekr 9X for modification, exhibiting it at a price of $400,000 (over 2.7 million RMB). Previously, Mansory only worked on Ferrari, Bugatti, and Rolls-Royce; this was its first time choosing a Chinese brand. Zeekr confirmed it was not an official collaboration.

Gui Shengyue proactively brought up this incident at the earnings meeting. He said, “If it were certain peers, the whole country would already know about it.” More than 1,400 people attended the international dealer conference held in Hangzhou in April. According to Gui, the consensus was Geely could “completely change the international image of Chinese cars.”

His exact words: “Chinese car brands are not just quick to transition to new energy, not just affordable and high-quality, but also can go head-to-head with the traditional BBA.”

Beyond Zeekr’s overseas expansion, another yet-to-materialize increment is i-HEV.

This set of self-developed hybrid technology, released on April 13, is positioned as a “substitute” for fuel cars. Its core difference from Toyota THS is cost. Gan Jiayue said at the earnings meeting that Toyota HEV costs 8,000 to 15,000 more than gasoline models, while Geely i-HEV’s incremental cost is over 30% lower. The pricing strategy is for users to switch to i-HEV from gasoline models with almost no extra expense.

The Xingrui i-HEV and Xingyue L i-HEV have announced pricing. Next, the entire Emgrand and Boyue lines will convert to i-HEV, and start exports from Q4.

If this bet works, the 340,000 gasoline cars Geely sold in Q1 won't be just inventory waiting to be replaced, but base volume waiting to be upgraded. Each vehicle switched from gasoline to i-HEV means a rise in unit value and gross margin.

Export volume targets are also expanding. At the annual results conference in March 2026, Gan Jiayue gave a budget target of 640,000 units and a stretch target of 750,000 units. At the Q1 investor meeting on April 29, he said 750,000 units “should be easily achievable.” Regional targets were raised from “three 150,000-unit markets” to “three 200,000-unit markets” — Latin America, ASEAN, and Europe, each at least 200,000 units. Latin America’s growth is close to 300%, Europe over 400%.

Fourteen overseas subsidiaries are switching from general agency to direct sales. Lynk & Co in Europe is leveraging Volvo’s dealer network, and at least 100,000 units of production capacity at the Renault JV plant in Brazil will go to Geely brands. Proton is a reference: when acquired in 2017, it had less than 9% share in Malaysia; by January 2026, it reached 30%.

None of these variables are reflected in the Q1 numbers yet. Starting Q2, there will be intensive delivery: 8X ramping up, i-HEV pricing finalized, 9X beginning exports.

If these moves succeed, Geely will prove not only its own profitability, but the existence of another business model in an industry where selling cars is becoming less and less profitable. This would also be the most direct testimony to Chinese automakers going global.

Risk Warning and DisclaimerThe market entails risk. Investments require caution. This article does not constitute individual investment advice, nor does it take into account any specific investment objectives, financial circumstances, or needs of particular users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their circumstances. Investing based on this is at your own risk. ```