Chery Auto H1 2026 Profit Falls 11.7% on FX Impact

Chery Auto H1 2026 Profit Declines Despite Revenue Growth

Chery Auto H1 2026 Profit declined as foreign-exchange changes weighed on its overseas business, despite stronger gross margins and rapid growth in new energy vehicle revenue. Chery Auto, China’s largest auto exporter, reported profit attributable to owners of 8.57 billion yuan ($1.26 billion) for the first half of 2026, down 11.7% year-on-year. Profit for the period fell to 9.02 billion yuan from 9.91 billion yuan a year earlier, while the net profit margin stood at 6.3%. Revenue was 143.28 billion yuan, up 1.2%, broadly flat year-on-year, while gross profit increased 25.1% to 23.04 billion yuan.

Overseas Expansion Supports Gross Margin Improvement

Chery’s gross margin improved substantially to 16.1% from 13.0% a year earlier, with the company attributing the improvement mainly to expansion in overseas markets. Overseas sales generally carry higher gross margins than the Chinese market, supporting profitability at the gross-profit level even as overall earnings declined. The company’s international business continued to expand rapidly during the period, making overseas operations an increasingly important contributor to revenue and financial performance. This development also means foreign-exchange movements have a greater potential effect on reported earnings, particularly when non-operating income and gains fluctuate significantly.

Foreign-Exchange Gains and Higher Costs Pressure Earnings

The main pressure on first-half profit came from factors outside core operations rather than a deterioration in gross profitability. Other income and gains fell 27.1% to 6.03 billion yuan from 8.27 billion yuan, primarily because of lower foreign-exchange gains. At the same time, research and development expenses increased 28.3% year-on-year to 6.67 billion yuan as Chery invested in electrification technologies, vehicle platforms, assisted driving and smart cockpits. Administrative expenses also rose 24.1% to 3.29 billion yuan. Income tax expenses increased 18.6% to 2.22 billion yuan, while profit contributions from joint ventures and associates declined 37.9% to 437 million yuan.

Overseas and NEV Revenue Gain Greater Importance

Overseas markets generated 98.97 billion yuan of revenue in the first half, up 51.0% year-on-year and representing about 69% of total revenue. As of June 30, Chery operated 12 major production bases globally, including three overseas, highlighting the scale of its international expansion. At the same time, the company’s new energy vehicle business continued to gain importance. NEV revenue rose 63.8% year-on-year to 59.28 billion yuan, increasing its contribution to total revenue to 41.4% from 25.6% a year earlier. The shift demonstrates the growing role of electrified products in Chery’s revenue mix.

ICE Vehicle Revenue Declines as Financial Position Improves

The changing product mix was also reflected in the decline of internal combustion engine vehicle revenue, which fell 24.8% to 69.51 billion yuan from 92.45 billion yuan. Overall passenger vehicle revenue remained broadly flat at 128.8 billion yuan. Chery ended the period with cash and cash equivalents of 63.42 billion yuan, up 35.1% from the end of 2025, while bank loans and other borrowings declined to 10.00 billion yuan from 15.92 billion yuan. Finance costs dropped 62.1% to 549 million yuan following loan repayments. The company’s debt-to-asset ratio was 81.7%.

Chery Auto Sales Continue to Increase in 2026

Vehicle deliveries continued to grow despite the pressure on reported profit. Chery Auto sold 1,275,076 vehicles in the first half of 2026, representing a 7.8% year-on-year increase, while July sales reached 261,876 vehicles, up 24.7% year-on-year. The sales performance indicates continued volume momentum as the company expands its international footprint and increases its exposure to NEVs. The company said it plans to broaden its product lineup, strengthen brand positioning and increase investment in next-generation technology research and development during the second half, while continuing to advance its global expansion strategy.

Frequently Asked Questions

Why did Chery Auto’s profit decline in the first half of 2026?
Chery Auto’s profit attributable to owners fell 11.7% year-on-year to 8.57 billion yuan in the first half of 2026, mainly because lower foreign-exchange gains reduced other income and gains. The company also increased spending on research and development, while administrative and tax expenses rose. Despite the earnings decline, gross profit increased 25.1% and gross margin improved to 16.1%, supported by overseas business expansion. Revenue from overseas markets reached 98.97 billion yuan, while NEV revenue increased 63.8% year-on-year, showing that international operations and electrified vehicles are becoming increasingly important to the company’s financial profile.

What are the key growth areas for Chery Auto in 2026?
Chery Auto’s first-half 2026 results show a significant shift toward overseas markets and new energy vehicles. Overseas revenue rose 51.0% to 98.97 billion yuan and accounted for about 69% of total revenue, while NEV revenue increased 63.8% to 59.28 billion yuan and represented 41.4% of total revenue. Vehicle sales also increased 7.8% to 1,275,076 units during the first half. The company plans to expand its product lineup, strengthen brand positioning and continue investing in next-generation technologies while pursuing further global expansion.