As of mid-July 2026, several leading Chinese automakers have issued earnings forecasts for the first half of the year, revealing that rising raw material and component costs are significantly eroding profit margins. Among six major companies that published forecasts, four anticipate outright losses, while the two remaining in the black project net profit declines of at least 60 percent.
GAC Group expects a net loss of 4.06 to 4.57 billion yuan, attributing the shortfall to higher raw material prices, increased sales investments, weaker joint-venture results and currency fluctuations. Changan Automobile forecasts a profit drop of 57.7 to 67.7 percent, to between 740 million and 970 million yuan, citing raw material inflation, exchange‐rate pressure and overseas investment costs. Seres has swung to a loss of 1.5 to 1.8 billion yuan, while BAIC Bluepark anticipates a 1.77 to 1.97 billion yuan deficit driven by steep upstream cost rises and ongoing R&D spending. JAC Motors is set to post a loss of around 740 million yuan, impacted by lower sales, joint-venture setbacks and exchange-rate swings. Great Wall Motor also reports a narrowed profit margin, pointing to delayed overseas tax subsidies and currency shifts as key factors.
Beyond commodities such as lithium carbonate, copper and aluminum, the shortage of automotive-grade storage chips has emerged as an acute challenge. With demand from data centers and AI applications surging, chip producers have prioritized higher-margin markets, leading prices for mature storage chips to more than double in the first half of 2026, according to TrendForce. Further price hikes of 60 to 70 percent are anticipated in the second half of the year. Lacking financial hedging tools like futures contracts, automakers are scrambling for supplies, prompting companies including GM, Ford and Nio to secure long-term agreements with chip suppliers.
Automakers now face a “double squeeze”: materials and components are driving per-vehicle costs up by at least 4,000 to 7,000 yuan (with some luxury models seeing 10,000 yuan increases), while domestic passenger-vehicle sales fell by 20.2 percent in H1 2026. To defend market share, companies are offering deep discounts and accelerating new model rollouts—averaging 3.6 introductions per day in the first five months.
According to S&P Global Ratings, with domestic demand unlikely to rebound sharply soon, cash-flow and margin pressures will persist. Firms with premium product portfolios, robust economies of scale and stable overseas operations are best equipped to absorb these cost headwinds, whereas smaller, low-margin players face a more uncertain outlook.
Source: CarNewsChina
