On August 20, CHERY AUTO released its 2026 interim results. In the first half of the year, the company posted revenue of RMB 143.28 billion, up 1.2% year-on-year, while net profit came in at RMB 8.57 billion, down 11.7%, with revenue growth stalling and profit swinging to a decline.

During the period, CHERY AUTO exported approximately 940,000 vehicles, a surge of 71.5% year-on-year, with overseas sales accounting for nearly 70% of total volume. However, weak domestic demand largely offset the strong overseas growth. More concerning, both overall per-vehicle selling price and export per-vehicle price declined, raising questions about how much room remains for the price-for-volume strategy going forward.

Despite modest sales growth, CHERY AUTO's inventory and receivables both climbed sharply, with inventory days and receivable turnover days extending by 34% and 35%, respectively, signaling deterioration in stock management and cash collection that has unsettled the market.

In fact, aside from the export-focused Chery brand which posted year-on-year growth, all other sub-brands under CHERY AUTO saw flat or declining sales. Among them, Zhijie, a key pillar in Chery's push into the premium segment, saw first-half sales tumble 57% year-on-year, the worst performance within the group, with volume of less than 20,000 units and an annual target completion rate of just 6%. Chairman Yin Tongyue had stated that Chery would "no longer just chase volume, but pursue brand elevation," yet Zhijie's current performance clearly falls short of that expectation.

Revenue Stalls, Profit Turns Down, Export Share Hits 70% While Per-Vehicle Price Keeps Falling

CHERY AUTO recently published its first interim report since listing. For the first half of 2026, revenue reached RMB 143.28 billion, up just 1.2% year-on-year, while net profit fell 11.7% to RMB 8.57 billion. Deducting non-recurring items, net profit attributable to shareholders dropped 13.3% to RMB 8.38 billion. The company attributed the net margin decline mainly to exchange losses, despite an improvement in gross margin.

However, Chery's earnings slowdown is not new. From 2023 to 2025, revenue growth was 76%, 65%, and 11%, respectively, while net profit growth was 91%, 18%, and 35%, showing a prolonged downward trajectory.

Notably, nearly all of the sales growth in the first half came from overseas markets. Exports reached roughly 940,000 units, up 71.5% year-on-year, representing 69.5% of total sales. Overseas revenue climbed 51.0% to RMB 98.968 billion, accounting for about 69% of total revenue.

Yet the expansion in export volume did not lift per-vehicle pricing. In the first half, CHERY AUTO's average selling price was approximately RMB 112,400, down 6% year-on-year, while per-vehicle net profit fell nearly 20% to RMB 6,700. In the second quarter, the average selling price dropped to RMB 109,000, down RMB 14,000 year-on-year, and the overseas per-vehicle price declined RMB 16,000 to RMB 108,000.

In stark contrast to the overseas surge, domestic revenue plummeted from RMB 76.055 billion a year earlier to RMB 44.312 billion, a decline of over 40%, nearly wiping out all the gains from overseas markets. The downturn in the domestic market, particularly in fuel vehicles, has put intense pressure on Chery at home.

The simultaneous decline in both overall and export per-vehicle selling prices has sparked concerns over how much further the price-for-volume approach can be pushed.

Inventory and Receivables Deteriorate, Zhijie Plunges 57% with Only 6% of Annual Target Met

In the first half of this year, CHERY AUTO sold 1.2751 million vehicles in total, up a modest 7.8% year-on-year. However, inventory surged 73% year-on-year to RMB 47.8 billion, and receivables rose 25% to RMB 56.6 billion, with both inventory and receivable turnover days expanding by 34% and 35%, respectively—clear signs of worsening stock and cash collection issues.

Currently, CHERY AUTO's brand portfolio includes Chery, Jetour, Exeed, iCAR, and Zhijie. In the first half, the Chery brand delivered 730,000 vehicles, up 25% year-on-year; iCAR sold 45,000 units, up 2.0%; Jetour delivered 260,000 units, down 14%; Exeed sold 33,000 units, down 45%; and Zhijie sold just 19,000 units, a 57% drop year-on-year, ranking last within the group.

Yin Tongyue once said that Chery would "no longer just chase sales volume but pursue brand elevation." Yet Zhijie, the most critical vehicle for Chery's premium ambitions, averaged only 3,200 monthly sales in the first half. Among the five brands under CHERY AUTO, Zhijie recorded both the lowest volume and the steepest decline, achieving only about 6% of its 300,000-unit annual target set at the start of the year.

In fact, Chery has made efforts to reverse Zhijie's fortunes. In January, Zhijie brought in Zhao Changjiang, former head of BYD's Denza sales division, as executive director and executive vice president. In March, Guo Rui, former CMO of Honor, was appointed chairman and CEO. Chairman Yin Tongyue has been direct about the investment, stating, "Chery has injected over RMB 20 billion in dedicated funds into Zhijie."

For now, however, Zhijie's performance clearly does not meet Yin's "brand elevation" expectations, and brand building has never been a problem that throwing money at it can solve.