J.P. Morgan anticipates a split in first-half results for China's auto sector, highlighting that while the industry has risen 9% year-to-date—trailing the Hang Seng China Enterprises Index by 18 percentage points—individual stocks face stark disparities driven by new models, sales, profits, and policy shifts. The firm's core views for Q2 earnings underscore key players: Leapmotor (09863) emerges as a standout, with quarterly sales surging 53% sequentially and gross margins holding steady. Profitability may arrive a quarter earlier than market forecasts, potentially boosted by additional gains from its carbon credit pact with Stellantis. Consequently, J.P. Morgan lifts its 2025 and 2026 profit projections by roughly 16% and 13%, hiking the target price from HK$82 to HK$90.

Li Auto-W (02015) could see a slight dip in vehicle gross margins this quarter due to promotional efforts, yet the spotlight falls on two new all-electric models: the i8 luxury SUV, priced around ¥350,000 and launching July 29, and the i6 mid-size SUV at approximately ¥250,000, debuting in September. These are poised to fuel sales and profitability from Q3 onward, leveraging the company's focus on family users and premium segments amid fierce low-end competition. Rated Overweight, the target holds at HK$135.

Great Wall Motor (02333) is forecast to report a robust 90% quarterly profit jump, aided by sales growth and deferred tax refunds from Russia, though year-over-year earnings may still slide 15%. XPeng-W (09868) expects marginal improvements in vehicle margins, with investor attention riveted on whether SUV sales like the G7 can double and on the market reception of the new P7 coupe—a rival to Xiaomi's SU7—launching in August, plus its first extended-range model in Q4. The Overweight rating stands, but the target price drops from HK$122 to HK$100.

Among joint ventures, SAIC Motor (600104.SH) earns an upgrade to Neutral from Reduce, with its target price climbing to ¥15 from ¥11, reflecting stabilizing profits and Volkswagen's plan to roll out 18 new vehicles via the partnership between 2026 and 2027. Meanwhile, GAC Group (02238) might issue a profit warning for H1. BYD Company (01211) retains an Overweight rating and a HK$180 target.

Currency fluctuations warrant caution, as yuan depreciation against major export currencies such as the ruble, real, peso, euro, and pound could yield forex gains for exporters including BYD, Great Wall Motor, Geely Auto (00175), and SAIC. Longer-term, the competitive landscape may fracture into three tiers: leaders with cost, scale, and integration edges (e.g., BYD, Geely Auto); innovation-focused newcomers emphasizing smarts (like Xiaomi Group-W (01810), Huawei, XPeng, Li Auto); and foreign automakers in China either scaling back or revamping strategies (such as Volkswagen and Toyota).