SHANGHAI — Geely Chairman An Conghui predicts China’s domestic automobile market will shrink again in 2027, signaling no quick end to the record sales slump expected this year.

The outlook from China’s third-largest automaker contrasts with the more optimistic forecast for 2 percent growth released just last month by the China Passenger Car Association.

An offered his assessment Oct. 29 while announcing a 9 percent increase in net income for the first three quarters on a 3 percent global sales increase.

“Many people are asking about predictions for the Chinese market next year. One thing we can be sure of is that the market will post negative growth,” An said.

An’s forecast comes as domestic sales of new passenger vehicles continue a double-digit slump this year. For the first three quarters, the country’s domestic new-car sales slipped 22 percent from a year earlier to 13.3 million, according to the China Passenger Car Association.

Chinese automakers are bracing for demand to slow further as the European Union implements steps to curb electrified-vehicle imports from China.

An said the “domestic market has entered a stage of saturation.”

Analysts at JP Morgan, in a Sept. 29 report, predicted Chinese vehicle demand will decline 5 percent next year, underscoring wider expectations for continued market difficulties.

Against such headwinds, An said Geely will try to expand market share and protect profitability by improving its technology and competitiveness.

Analysts attribute China’s extended slide to reduced vehicle trade-in subsidies, a new purchase tax on electrified vehicles, high fuel prices in the wake of the Iran war, and weaker consumer spending amid a slowing domestic economy. The trade group sees 2026 sales falling 22 percent.

By contrast, China’s vehicle exports climbed 75 percent to top 7 million in the first nine months.

Geely is bracing for export headwinds amid EU crackdown

The EU is the largest export market, with exports to the common market surging 87 percent to 1.83 million in the first three quarters. Some 1.33 million of those were electrified vehicles, nearly doubling from a year earlier, according to the China Passenger Car Association.

That export channel faces new challenges.

After hiking tariffs on China-made battery-electric vehicles to 45.3 percent in 2024, Brussels is set to impose a strict quota on Chinese hybrids and plug-in hybrids next year. It is also planning new rules to tie incentives to local content of electrified vehicles.

An said Geely would cope by increasing localized production. Geely has some “advantages” there thanks to European acquisitions by parent company Zhejiang Geely Holding Group, An said. Recent partnership with global automakers also help, he said.

Outside China, Geely taps existing production capacity of its partners, which involves “lower risk” and enables “faster speed” than building manufacturing facilities, An said.

“I can tell you that product validation, technology upgrades of factories, and establishment of a localized supply chain are all well underway, and several key products will be put into production in Europe,” he said, without elaborating.

In August, An said that Volvo, acquired by Zhejiang Geely Holding Group from Ford in 2010, would produce “premium models” for Geely in Europe starting in 2028. On Oct. 23, the Swedish carmaker said it is “exploring the option” of assembling Geely vehicles at its Gent plant in Belgium.

And in July, Geely announced that it would build two electrified models at Ford’s Valencia plant in Spain, with the first model to roll off the production line in 2028.

Geely profit climbs 9 percent, on 3 percent global sales increase

Geely markets gasoline, battery EVs and plug-in hybrids under its namesake mass-market brand. It also produces premium gasoline and plug-in hybrid models for its Lynk & CO marque as well as Zeekr-badged premium battery EV models.

For the first three quarters, its net income increased 9 percent from a year earlier to nearly 14 billion yuan ($2.1 billion), with revenue climbing 13 percent to 273 billion yuan ($41 billion), according to filings on the Stock Exchange of Hong Kong.

The company’s sales surge outside China mainly drove the profit growth.

In the nine-month period, Geely’s global deliveries rose 3 percent year over year to 2.24 million vehicles, with sales outside China soaring 169 percent to 798,000, Geely said.

For the same period, Europe was Geely’s largest export market where it sold more than 310,000 vehicles. Europe accounted for 39 percent of its overall overseas deliveries.

Of that volume, 170,000 were sold in Eastern Europe, with the remaining 140,000 delivered in the rest of Europe, according to numbers Geely has released.

The company didn’t provide a sales breakdown for the EU market in the period.