Automotive stocks on the Hong Kong market continued their downward trajectory.

At the time of writing, shares of BAIC MOTOR (01958) were down 8.14% at HK$0.79. XPENG-W (09868) fell 4.55% to HK$45.72. GAC Group (02238) declined by 4.09% to HK$2.11, while Li Auto-W (02015) dropped 2.19% to HK$46.36.

The automotive sector is grappling with a situation where revenue increases are not translating into higher profits.

Data indicates that in the first quarter, the sector's revenue grew 2.94% year-over-year to RMB 946.277 billion, but net profit attributable to shareholders plummeted 22.30% to RMB 32.082 billion.

While the gross profit margin edged up slightly to 16.47%, the net profit margin fell to 3.64%.

The pressure on profitability primarily stems from the ongoing impact of price wars across the industry's supply chain.

Goldman Sachs noted that the trend of profit downgrades in China's auto industry is accelerating and has consequently reduced its forecast for domestic passenger vehicle sales by 5%.

Furthermore, the European Union is poised to impose countervailing duties on plug-in hybrid vehicles, and Southeast Asian nations are raising market entry barriers for electric vehicles.

These developments are hindering the overseas growth narrative for automakers, with Hong Kong-listed car companies heavily reliant on international markets experiencing more pronounced share price declines.