Automotive stocks in Hong Kong are trading lower across the board.

At the time of writing, BAIC MOTOR (HKEX: 01958) shares are down 6.98% to HK$0.80. GWMOTOR (HKEX: 02333) has fallen 3.2% to HK$8.48. XPENG-W (HKEX: 09868) is down 2.97% at HK$50.60, and LI AUTO-W (HKEX: 02015) has declined 2.84% to HK$47.14.

The declines follow the release of the latest market data. Figures show that retail sales of passenger vehicles in China for June totaled 1.602 million units. This represents a year-on-year decrease of 23.2%, though it marks a month-on-month increase of 6.1%.

For the first half of the year, cumulative retail sales of passenger vehicles have declined by 20.2% compared to the same period last year. Analysis of the June data suggests the primary reason for the domestic retail decline was a "collapse in fuel vehicle" sales, which accelerated the penetration rate of new energy vehicle (NEV) retail sales to exceed 60%, reaching 62.8%. The pace of electrification substitution is exceeding expectations.

Separately, recent adjustments to the vehicle and vessel tax incentives for energy-saving and new energy vehicles have been announced by relevant government ministries.

In a research note, Changjiang Securities pointed out that while the policy change is expected to lead to a slight increase in usage costs, the absolute amount is relatively small. Consequently, the overall impact on the automotive market is anticipated to be limited. Furthermore, unlike the rush to purchase vehicles ahead of the NEV purchase tax subsidy phase-out at the end of last year, this tax adjustment is not expected to trigger a similar pre-policy buying surge.