According to CN Wire, Li Auto’s Q3 revenue fell 36.2% year-on-year on weaker deliveries, leading to a third-quarter net loss. Vehicle deliveries plunged 39% YoY to 93,211 units. The car manufacturer expects Q4 vehicle deliveries between 100,000 and 110,000, yielding quarterly revenue of RMB26.5 billion and RMB29.2 billion.
Profit Margin Squeezes Collide with Renewed Housing Sector Troubles
Concerns over demand and profit margins coincided with renewed housing sector stress, another challenge for policymakers.
CN Wire reported:
“Chinese state-backed property developer Vanke saw its bonds plunge over 20% on Wednesday, triggering trading suspension on five exchange-traded bonds, according to the Shenzhen Stock Exchange. Markets are replaying a pattern from earlier this year, said Yao Yu, founder of Shenzhen-based credit research firm RatingDog. He said markets had priced for Vanke not to be able to meet debt obligations, sparing a steep sell-off before rebounding on signs of state support.”
Yao reportedly highlighted two potential outcomes, stating:
“Now, market rumors suggest Shenzhen has sought help from Beijing, leaving two scenarios – no rescue or central backing.”
Vanke was reportedly China’s largest developer and a bellwether for broader property troubles.
The Hang Seng Mainland Properties Index fell 0.21% on Wednesday, November 26, and by a further 0.48% in early trading on Thursday, November 27. The Index avoided heavier losses, supported by reports of fresh policy measures to bolster the housing market.
Policymakers are reportedly considering mortgage subsidies for first-time buyers, higher income tax rebates for mortgage borrowers, and lower home transaction costs.
Recent economic data and property sector-related news leave China’s economy in a precarious position. Property investment remained the biggest drag on broader fixed asset investment in October, falling 14.7% YoY in the first 10 months of the year.
For context, the property sector accounted for around 25% of China’s GDP in 2023-2024, down from around 30% in the sector’s peak expansion phase during the 2010s.
