Morgan Stanley has identified three Chinese automotive companies—BYD, Geely and SAIC—as top-rated stocks in the sector, citing scale, new model launches and international expansion as key growth drivers amid a subdued domestic market.
The bank’s assessment comes as Chinese automakers accelerate overseas expansion to offset weaker domestic demand. BYD, the country’s largest electric vehicle manufacturer, reported annualized overseas sales of approximately 1.67 million units, with local production covering about 51% of that total—second only to Great Wall Motor among the six automakers compared. The company’s June sales rose 5.5% year-over-year to 403,472 units, marking the second consecutive month of growth.
Geely, meanwhile, reported a gross margin improvement to 17.9% from 16.2% in the prior-year period, though first-half revenue fell short of expectations. The company is preparing an aggressive product rollout from August through December, including the upcoming Galaxy TT, aimed at sustaining momentum in a competitive market.
SAIC Motor, China’s largest state-owned automaker, continues to rely more on direct exports than overseas manufacturing. Its current overseas production capacity stands at roughly 385,000 units annually, covering just 26% of its 1.5 million annualized overseas sales. To strengthen its European presence, SAIC announced plans to build its first overseas manufacturing plant in Galicia, Spain, marking a strategic shift toward local production in the EU.
Morgan Stanley’s ratings reflect confidence in the sector’s ability to leverage new model cycles and international growth strategies. BYD is set to introduce the Sealion 08, Great Han and Qin MAX in the third quarter, followed by the Qin PLUS, Tang and Fangchengbao Shark pickup in the fourth quarter—timed to bolster showroom traffic during the autumn sales season. SAIC’s EU plant, expected to begin operations in coming years, will further support its export-driven expansion.
The bank’s broader coverage includes select suppliers such as Minth, which contributes to the sector’s supply chain resilience as automakers scale production globally.
