Morgan Stanley: China Auto Market Hits Bottom, Recovery Expected as Early as August; BYD, Geely Seen as Leaders

According to Morgan Stanley's latest research report released in late June, China's automotive market is approaching a bottom after a weak second quarter, with true recovery potentially beginning as early as August or September. Channel surveys and industry interviews indicate auto sales have stabilized, though end-consumer demand remains sluggish. The investment bank noted that market sentiment is significantly more pessimistic than fundamentals warrant.

For Q2, Morgan Stanley estimates Chinese passenger vehicle wholesale sales at 6.7 to 6.9 million units, down 3% to 5% year-over-year—an improvement from Q1's 8% decline. The analyst expects BYD and Geely Automotive to be best positioned to benefit from the recovery, citing their complete product portfolios, scale advantages, and continuous new model launches.