Automotive stocks in Hong Kong continued their recent downward trajectory.

At the time of writing, shares of XPENG-W (09868) were down 3.94% to HK$49.52, while LI AUTO-W (02015) fell 3.88% to HK$48.56. BAIC MOTOR (01958) also declined, dropping 1.11% to HK$0.89.

Recent commentary from industry figures has highlighted a challenging environment. On June 13th, Li Bin, founder, chairman, and CEO of Nio, stated at a forum in Chongqing that the Chinese automotive industry has entered a new and "most brutal" phase of development this year. He noted that domestic retail sales for the January to May period fell by 19.5% year-on-year and cautioned that a reversal is unlikely in the second half of the year. Li Bin urged the entire industry to prepare for a potential full-year decline in domestic retail volume of 15% to 20% compared to the previous year.

Analysis from Dongxing Securities points to several factors behind the sector's underperformance. The firm indicated that a combination of declining sector earnings and a market focus shifting towards high-growth technology sectors has led automotive stocks to lag behind the broader market.

From January 1st to June 16th, while the Shanghai Composite Index rose 3.01% and the CSI 300 Index gained 5.49%, the CITIC Passenger Car Index plunged 23.52% and the CITIC Auto Parts Index fell 9.75%.

Regarding corporate performance, the passenger vehicle segment has faced pressure on both revenue and profits due to the downturn in the domestic automotive market. For most automakers, the decline in net profit attributable to shareholders has been significantly more pronounced than the drop in revenue.