By Jiahui Huang


Shares of a host of Chinese electric-vehicle makers rose in Hong Kong, helped by better-than-expected sales in a typically slow month.

Geely Automobile led gains among Hang Seng Index constituents, advancing 6.1% by the midday break on Friday. Li Auto rose 5.3%, while NIO, Great Wall Motor and XPeng added 1.2%, 1.5% and 0.15%, respectively, against the benchmark index's 0.3% gain.

On the whole, January sales data released by the companies overnight painted a picture of slowing but still considerable demand in one of the world's largest EV markets.

Geely posted record sales on the back of a steep rise in deliveries of its electric and hybrid models. Sales by Li Auto, NIO and Xpeng fell from December, when end-year discounts and government subsidies helped prop up sales, but rose from a year earlier.

Analysts said overall, the sales were positive given the usually softer interest in car purchases in January, coming after peak buying season.

Demand was "solid," helped by policy support from Beijing, said Gary Ng, senior economist at Natixis.

A number of challenges remain for China automakers in 2024, including an ongoing price war and high inventory levels. China's vehicle inventory alert index, a gauge of inventory levels among automakers, reached 60% on Jan. 24, up from 54% a month earlier.

And price cuts are taking a toll, with companies' profit margins falling as they push for volume and better market share positions. Tesla this week began offering cash discounts on some configurations of its Model Y vehicles in China, weeks after it unveiled fresh price cuts for its Model 3 and Model Y.

"We expect overall market momentum to remain sluggish, at least within [the first quarter], considering the upcoming Chinese New Year holiday season," said Nomura analysts Joel Ying and Frank Fan.

They think demand won't recover until March or April, and believe winners in the EV space will come down to the best technology or lower prices.

In the short term, "we suggest investors [be] patient," they added.


Write to Jiahui Huang at jiahui.huang@wsj.com


(END) Dow Jones Newswires

02-02-24 0133ET