Geely Automobile Holdings Ltd (00175.HK) saw its stock price plummet by 9.46% in Monday's trading session, as Chinese vehicle stocks faced a broad selloff in Hong Kong. The significant drop came in the wake of industry leader BYD Co.'s announcement of sweeping price cuts across its electric and hybrid vehicle lineup.

The decline in Geely's stock was part of a sector-wide trend, with several Chinese automakers experiencing substantial losses. BYD, China's top-selling car brand, initiated price reductions of up to 34% on 22 of its models, intensifying competition in an already challenging market. This aggressive pricing strategy has raised concerns among investors about potential margin pressures and market share battles in the world's largest automotive market.

The Chinese auto industry has been grappling with decelerating growth in electric vehicle sales, despite reaching new annual highs. Automakers are resorting to price cuts to stimulate sluggish consumer demand, exacerbated by broader economic challenges in China. The China Passenger Car Association reported that dealership inventory levels reached 3.5 million cars in April, the highest since December 2023, indicating a struggling market. As competition intensifies and companies like BYD aggressively reduce prices, investors appear to be reassessing the outlook for Chinese automakers, including Geely, leading to the sharp stock price decline observed on Monday.