Chinese carmakers eye Q3 export surge as EU caps and tax cuts loom

Hybrid vehicle exports are projected to deliver a significant earnings lift for leading Chinese carmakers in the third quarter, with BYD likely posting its biggest net-income gain in six quarters and Geely expected to see profit rise about 36%. However, the outlook is clouded by the European Union's decision to limit Chinese hybrid imports to 350,000 units annually and China's reduction of the export VAT rebate to 9% from 13% starting April 1.

Analysts warn that the EU quota could cut roughly 60% of the hybrid sales of BYD, Saic Motor and Chery Automobile in Europe. To mitigate the impact, firms are front-loading shipments and expanding local production overseas; Xpeng already manufactures in Austria, BYD aims to start a Hungarian factory this quarter, and Leapmotor has a joint venture with Stellantis. While the sector faces higher costs and trade barriers, analysts suggest that clearer policy signals may ease investor uncertainty. The shift toward localisation is seen as a way to sustain growth, reduce tariff exposure and improve competitiveness in the European market.