Great Wall Motor (长城汽车) posts record revenue but profits under pressure as overseas push erodes margins

Results

Great Wall Motor (长城汽车) delivered a mixed 2025: record annual revenue of RMB 222.82 billion (2228.2 亿元), up 10.2%, and a strong fourth quarter with RMB 69.24 billion (692.4 亿元), up 15.5%. Yet profitability slipped—net profit attributable to shareholders fell 22.07% to RMB 9.86 billion (98.6 亿元), and Q4 net profit was only RMB 1.23 billion (12.3 亿元), pushing quarterly net margin down to 1.8%. Annual net margin was 4.4%, and it has been reported that government subsidies of RMB 3.75 billion (37.5 亿元) were material to the bottom line; exclude those and the pressure looks worse.

Drivers and risks

Overseas sales were the engine of growth, with foreign shipments rising 33–43% in H2 and accounting for 43% of volume by Q4. But margins in overseas markets collapsed—the overseas gross margin declined to 16.7% versus 18.6% domestically—turning international success into a drag on overall profitability. Reasons include rising trade costs, intensifying price competition as Chinese rivals (including BYD (比亚迪) and Geely (吉利)) and new entrants push abroad, and early-stage overseas capacity rollouts (e.g., Brazil) whose scale efficiencies have yet to appear. It has been reported that Russia raised an import-related auto tax in 2025, which also increased export costs for key markets.

Channels and brands

The company’s dependence on dealer networks shaped 2025 outcomes. Haval (哈弗) and Tank (坦克) remained volume pillars, while WEY (WEY/魏牌) and Ora (欧拉) staged notable turnarounds after channel consolidation—most Ora models are now sold through Haval outlets. At the same time Great Wall’s heavy investment in self-operated, high‑end retail channels and new product launches pushed up sales, management and R&D spending: full‑year selling expenses rose 43.9%, a headwind that amplified the “revenue up, profit down” narrative.

Outlook

So which is it: a structural problem or a temporary cost of transformation? Management appears to be pursuing a Toyota‑style, slower globalization playbook—prioritizing controlled overseas expansion and channel reshaping over short‑term margin maximization. If scale in lower‑margin foreign markets and new local plants materialize, margins could recover and valuation may re‑rate. But geopolitical friction, trade policy shifts and accelerating global price competition mean recovery is not guaranteed. Can overseas volume turn from a cushion into a stabilizer for profit? Investors will be watching whether 2026 brings scale economics rather than shrinking margins.