"Autonomous No. 1" changes hands?

The first month of 2026, the entire automotive industry felt a tense anticipation of a somber atmosphere. As of February 4th, most car companies experienced a month-on-month decline in sales, with only a few brands defying the trend and growing.

Recently, Geely Auto reported its January results, with sales reaching 270,200 units. In comparison, BYD’s January sales were around 210,000 units. Based on the current sales data released by car companies, Geely Auto surpassed BYD in January, claiming the title of the “Top Independent Brand” for the month.

A closer look at the specific sales changes of these two companies reveals that fuel vehicles became a key factor in Geely’s countertrend rebound in January. This also serves as a metaphor: the era of relying solely on the single powertrain dividend for easy wins is rapidly fading. The era that emphasizes systemic strength, integration efficiency, and global all-track, all-around capabilities seems to be making a strong comeback.

Behind this shift in rankings is China’s auto market, which, after five years of frantic electric drive acceleration, has entered an extremely delicate and brutal turning point. As Morgan Stanley pointed out in its latest industry report, 2026 will be a year when growth inertia fails. With the halving of purchase tax incentives and the tapering of local subsidies, the competition between new energy vehicles and fuel vehicles is officially being brought back to a more realistic starting line.

The change of the “Top Independent Brand” is just the beginning of this unpredictable and complex drama. In this game, no one can sit on the throne forever.

Decline of the Dividend

Geely Auto’s ability to reclaim the “Top Independent Brand” throne in January 2026 mainly stems from its “dual-track” strategy, which provides it with greater flexibility to respond to the current market environment.

Geely’s January sales of 270,200 units achieved a 1% year-on-year increase and a 14% month-on-month expansion against the trend.

Looking at the sales structure, in January, Geely China Star series sold 134,448 units, an 86% increase month-on-month; the high-end China Star series surged by 160% month-on-month.

In the new energy sector, Geely achieved 124,252 units in January, maintaining a 3% year-on-year growth, with internal structural changes quietly taking place. The Zeekr brand sold 23,852 units, nearly doubling its growth rate (99.7%). In the mainstream market, Geely Galaxy, supported by popular models like Xingyuan (41,600 units) and Xingjian 7EM-i, reached a sales volume of 82,990 units.

Gu Shengyue, CEO and Executive Director of Geely Auto, stated, “The halving of the purchase tax policy is a positive for Geely.” He analyzed that Geely’s high proportion of fuel vehicles makes the first quarter of 2026 favorable for its fuel vehicle segment.

Looking at the overall Chinese auto market in January 2026, the impact of the halving of purchase tax subsidies is significant.

According to preliminary statistics from the China Passenger Car Association, retail sales in the domestic passenger car market in January are expected to reach 1.8 million units, a nearly 37% month-on-month decline. The data clearly outlines the consumer return path: in January, the retail penetration rate of new energy vehicles in China sharply dropped from nearly 60% in December 2025 to around 44.4%, with a brief dip to 35.5% in early January. Compared to the rapid progress of new energy vehicles over the past two years, with penetration rates often exceeding 50%, the January data undoubtedly sounds an alarm for the market.

Li Yanwei, a member of the Expert Committee of the China Automobile Circulation Association, pointed out, “The poor sales of new energy vehicles in January are mainly caused by changes in subsidy policies.”

A nearly 15 percentage point retreat in penetration rate is a short-term change driven by policy and physical environment pressures.

The substantive driver of this return is the 5% “purchase tax threshold.” Starting January 1, the purchase tax for new energy vehicles shifted from full exemption to a 50% reduction, with the maximum exemption limit reduced to 15,000 yuan per vehicle. For a mainstream pure electric model priced around 200,000 yuan, consumers need to pay an additional nearly 10,000 yuan in purchase tax. Against the backdrop of price wars that have already squeezed terminal discounts, this 5% explicit expense erodes the cost advantage of new energy models compared to fuel vehicles.

Many auto salespeople told Wall Street Insights that in January, consumers were more hesitant when purchasing cars, and the buying cycle was noticeably longer. “The inconsistent policy rhythm makes it hard for buyers to judge whether now is the right time to buy.”

Additionally, January, as a key pre-Spring Festival car-buying window, saw consumers’ demand for reliability in long-distance, cross-province travel and low-temperature environments peak. With structural deficiencies still present in charging infrastructure, the previously cautious new energy audience, under the dual pressures of rising purchase taxes and winter range reductions, quickly shifted toward the more efficient fuel and PHEV segments that offer both power and mileage while saving on taxes.

Gong Min, head of China automotive industry research at UBS, told Wall Street Insights, “At the start of this year, the domestic market is indeed facing multiple challenges, including a 5% increase in purchase tax for new energy vehicles, the tapering of replacement subsidies, and rising raw material prices. Overall, terminal sales are under pressure.”

Turning Point

Geely’s January top spot is just the tip of the iceberg in market changes.

As the subsidies for old-for-new programs tighten and the cost of purchasing new energy vehicles normalizes upward, the market is shifting from a novelty-driven phase to a value-driven one.

When the maximum per-vehicle exemption limit shrinks, those who once relied on policy patches to maintain slim margins and tried to offset premiums through subsidies will see their strategies collapse. This policy lever has once again brought fuel vehicles, hybrid vehicles, and new energy vehicles close to the same starting line. The era of policy-driven dimensionality reduction has ended.

Now, new energy vehicles must compete head-to-head with highly evolved hybrid and highly efficient fuel vehicles without any protective shield. This means that automakers’ competition focus must shift from storytelling to efficiency.

Regarding whether fuel vehicles will continue to maintain strength, Cui Dongshu, Secretary General of the China Passenger Car Association, told Wall Street Insights, “No.” From the performance of the exemption catalog for new energy passenger vehicles in 2024-25 to 2026, many new energy passenger cars are not included in the catalog, which will force companies to accelerate new product development and iteration, leading to a “low at first, then high” trend in the overall passenger car market.

Li Yanwei also pointed out that the current pressure on new energy vehicle sales is expected to continue for several months.

This also means that in the coming months, fuel vehicles and new energy vehicles will be in a tense standoff. In the 2026 landscape, incremental growth has nearly disappeared; every new car transaction is essentially a struggle for market share.

Gong Min predicts that this year, the growth of domestic new energy vehicles will be around 8%, compared to about 30% last year, a significant slowdown.

Moreover, simple price cuts can no longer guarantee scale growth. Automakers must squeeze profits from every penny of the supply chain. Those who can reorganize and reduce internal friction, like Geely and GAC, will be the ones to survive through the long winter.

Industry experts generally believe that 2026 will be China’s automotive industry’s “coming of age.” The industry is shifting from scattered chaos to a highly systemic and ecological confrontation centered around giants.

The change of the “Top Independent Brand” reveals the most authentic side of China’s auto market: in this jungle law-dominated battlefield, no one can rely on past achievements to stay on top forever.

For Geely, reclaiming the throne in January is not the end but the beginning of a more rigorous scrutiny. For the entire industry, the turning point has arrived. Those still clinging to policy dividends and organizational rigidity will be swiftly eliminated in this decisive battle.

This grand chess game has just entered its most perilous midgame. No one can sit on the throne forever; only players who continuously step out of their comfort zones and achieve efficiency evolution on the real battlefield will have the right to stay at the table.