On August 17th, Beijing time, Geely Auto (001750.HK), a company listed on the Hong Kong Stock Exchange, made a significant announcement after the market closed. The company's founder, Li Shufu, would be stepping down from his positions as Chairman of the Board and Executive Director of Geely Automobile Holdings Limited. In a new role, he will be appointed as the Lifetime Honorary Chairman of the company. Nevertheless, Li Shufu will maintain his position as Chairman of Zhejiang Geely Holding Group.

While Geely's performance report is commendable, Li Shufu's resignation stands out as the more pivotal news, compared to the routine nature of such financial disclosures.

As the visionary behind Geely Auto, Li Shufu's decision to resign and hand over the reins to An Conghui could have profound implications for the company's future. According to Geely Auto's official narrative, this transition signifies the company's move from a founder-led startup and growth phase to a maturity phase driven by systems and teams. In this new era, the company will pivot away from reliance on individual charisma and authority, instead focusing on organizational systems and talent pipelines.

Beyond Li Shufu's resignation and An Conghui's ascension, Geely Auto has also undertaken a series of personnel reshuffles. After all, a change in leadership often heralds new strategies and directions. For detailed information, please refer to the official announcement, which will not be delved into here.

The long-term impact of these changes on Geely Auto remains to be seen.

As investors, it is crucial to evaluate the situation based on financial reports and stock prices. However, it's worth noting that Li Shufu will continue to serve as Chairman of Zhejiang Geely Holding Group, allowing him to intervene if significant developments arise at Geely Auto. This is particularly pertinent as Chinese automakers navigate a brutal phase of consolidation and a critical period of new energy transformation. For Geely Auto to achieve its ambition of becoming a century-old enterprise, it cannot afford any missteps.

Turning our attention to Geely Auto's interim results for 2026, here are some key data points for the first half of the year (H1):

1. Total revenue reached RMB 173.6 billion, marking a 15% year-on-year increase and setting a new historical high.

2. Total sales volume stood at 1.423 million vehicles, reflecting a modest 1.0% year-on-year increase.

3. Core net profit attributable to the parent (excluding non-recurring items) was RMB 9.68 billion, a substantial 46% year-on-year increase, with a core net profit margin of 5.6%.

4. Gross profit margin improved to 17.9%, a 1.5 percentage point increase year-on-year.

5. The average selling price (ASP) per vehicle rose to RMB 112,000, a significant 16% year-on-year increase.

6. Core net profit per vehicle reached RMB 6,806, a 45% year-on-year increase.

7. R&D investment totaled RMB 9.06 billion, an 8% year-on-year increase, with an R&D expense ratio of 5.2%.

8. Cash reserves amounted to RMB 69.56 billion.

Additionally, there are two supplementary data points worth noting:

1. New energy vehicle sales volume reached 799,500 units, a 10% year-on-year increase, with a penetration rate of 56.2%. The penetration rate for June alone soared to 67%, surpassing the industry average.

2. Export sales volume for H1 2026 was 474,200 units, a remarkable 158% year-on-year increase, with the half-year export volume exceeding the total export volume for 2025.

Geely Auto's financial report for H1 2026 underscores its high-quality development.

This is primarily evident in the growth of the gross profit margin, average selling price per vehicle (ASP), and core net profit per vehicle.

Despite a mere 1% year-on-year increase in total sales volume, total revenue surged by 15% year-on-year, thanks to a 16% increase in the average selling price per vehicle. This reflects Geely's strategic shift towards premiumization, driven by the sales growth of high-priced models from the Zeekr brand.

Of course, this achievement is also attributable to the cost synergies brought about by Geely's "One Geely" strategy. Currently, Geely Auto's four major brands, including Zeekr, Geely Galaxy, Lynk & Co, and Geely China Star, share underlying technology platforms such as SEA and Thunder. While the absolute value of total R&D investment has increased, the R&D expense ratio has slightly decreased, and the administrative expense ratio has dropped to 1.7%, indicating enhanced organizational efficiency.

It is worth mentioning that Geely Auto also leveraged high export growth in H1 to offset the sales decline in the domestic market, attributed to factors such as subsidy reductions and tax incentive reductions. The 158% year-on-year increase in overseas sales enabled Geely Auto to maintain a 1% growth in total sales volume.

The higher average selling price and gross profit margin of overseas sales made Geely Auto's core financial indicators for H1 2026 particularly outstanding.

However, with the recovery and growth of domestic market sales, the intense competition in the domestic market may render Geely Auto's H2 data less impressive.

More notably, while Chinese automakers are currently focusing on exports, the overseas market is not an untapped blue ocean and will inevitably become a fiercely competitive red ocean due to the efforts of Chinese automakers. In the past two months, China's monthly automobile exports have both exceeded 1 million units, indicating that the sustainability of this high-priced, high-margin overseas market warrants close attention.

Whether Geely Auto's decision to change leadership at this critical juncture is prudent or not will be determined by the passage of time.