Harmony Auto (03836) slipped nearly 3% in intraday trading on Friday, with its share price extending a decline of more than 60% from the high of HK$1.46 reached on March 16. As of writing, the stock was trading down 2.78% at HK$0.525, with trading volume notably thinner.

On the news front, Cui Dongshu, Secretary-General of the China Passenger Car Association, recently noted that China's auto industry is in the midst of a deep transformation amid fierce competition in the existing market. While revenue at domestic automakers has continued to grow, the pace has clearly slowed, and the scale gap with international giants remains. At the same time, industry profit is increasingly concentrated upstream at leading battery manufacturers, while downstream dealers are grappling with a severe survival crisis.

Affected by the price war and persistently high inventory levels, capital chain and supply chain financing pressures across the sector are becoming more pronounced, with systemic risks steadily rising. It is worth highlighting that data from the China Automobile Dealers Association shows the auto dealer inventory warning index for August stood at 62.3%, up 5.3 percentage points year-on-year and 1.2 percentage points month-on-month, remaining well above the 50% threshold for an extended period. Automakers have continued to push inventory onto dealers, while showroom traffic has declined, keeping dealers' cash flow under sustained strain.

According to Harmony Auto's interim report, the group posted robust operating results for the first half of 2026, with total sales reaching 51,674 vehicles. Hong Kong and overseas markets emerged as the main growth drivers, contributing 40,183 vehicles, or 77.8% of total sales, while mainland China sales fell to 11,491 vehicles, accounting for 22.2% of the total.