China's carmakers split into three camps as 2026 targets sharpen industry divide

by GE Cheng

China's auto market is entering 2026 with strategies diverging more sharply than in recent years. As carmakers finalize 2025 results and set new targets, the world's largest vehicle market is increasingly splitting into three groups: those pushing rapid expansion, those pursuing controlled growth, and those prioritizing margins and financial resilience.

The shift points to a market moving beyond a pure volume race. As electrification accelerates and competition intensifies, analysts say execution capacity, capital discipline and profitability are becoming as important as headline sales growth.

A divided close to 2025

Preliminary data show that only six automakers met their full-year sales targets in 2025, underscoring widening performance gaps.

Among established manufacturers, BYD, Geely Auto and SAIC Motor delivered broadly in line with plans. BYD sold about 4.6 million vehicles, ranking first globally in pure battery-electric sales. Geely delivered over 3 million units, up 39% year on year, while SAIC sold roughly 4.51 million vehicles, a 12% increase.

Several newer players exceeded expectations. Leapmotor delivered close to 600,000 vehicles, while XPeng more than doubled deliveries to 429,000 units. Xiaomi Auto, in its first year of mass production, sold more than 410,000 vehicles.

Others missed internal goals. Li Auto delivered 406,000 units, while the Huawei-backed Harmony Intelligent Mobility Alliance sold 589,000 vehicles, well below its early 1 million target.

Researchers at Gasgoo, a China-based auto industry research firm, said the divergence reflects differences in scale, product positioning and operational maturity, amplified by China's rapid shift toward electric and intelligent vehicles.

Expansion plans push execution limits

The most aggressive 2026 targets come from Leapmotor and the Huawei-backed Harmony Intelligent Mobility Alliance, both seeking sharp increases in scale.

Leapmotor plans to lift deliveries from about 600,000 vehicles last year to 1 million in 2026, implying growth of nearly 70%. The target follows a year in which the company reported profits over the first three quarters, supported by a vertically integrated model that has helped control costs.

Analysts said execution will hinge on whether Leapmotor can expand manufacturing, retail and after-sales networks while managing overseas growth and higher-end launches.

The Harmony Intelligent Mobility Alliance has set a target range of 1 million to 1.3 million vehicles, requiring growth of up to 120%. The platform spans five brands across a broad price range. Plans to roll out 11 to 18 new models in 2026 highlight technological ambition but also raise questions about brand differentiation and coordination among partner automakers.

Gasgoo said progress will depend on shifting investment from expanding model line-ups to improving platform-level efficiency and cost control.

Measured growth shaped by capacity

By contrast, Great Wall Motor and Xiaomi Auto have set more moderate targets.

Great Wall Motor sold 1.32 million vehicles in 2025, supported by steady overseas expansion. Its 2026 goal of more than 1.8 million units implies growth of about 36%, which analysts see as ambitious but aligned with existing capacity.

Xiaomi Auto has set a 2026 target of 550,000 vehicles, about 34% growth. After a strong debut year, management has highlighted production constraints and supply-chain stability, focusing on converting early demand into repeat purchases rather than chasing rapid volume expansion.

Analysts note that Xiaomi's single-brand, ecosystem-led approach contrasts with Huawei's multi-brand alliance model, making 2026 a key test of two technology-driven paths into the auto industry.

Profit focus deepens as market matures

A third group is placing greater emphasis on profitability.

Geely Auto has set a 2026 target of 3.45 million vehicles, implying growth of around 14%. While below recent industry averages, the goal reflects a focus on product mix and margins, even as its Galaxy brand surpassed 1.2 million sales in 2025.

Among newer brands, Li Auto and Nio are also expected to take a more measured stance. Nio, which delivered 326,000 vehicles last year, is prioritizing margin improvement and operational efficiency over aggressive volume targets.

With China's new-energy vehicle penetration rate expected to exceed 60% in 2026, competition is set to intensify further as the market moves deeper into consolidation. Expansion-driven players face pressure to show that rapid growth can be sustained without undermining operations, while more cautious manufacturers are betting that tighter cost control and profitability will provide resilience in a more crowded market.