3Q26 Missed; Volume Grew but ASP Slowed

We view FX loss and quality provision as one-off and thus non-event cost items, but we are concerned that ASP growth may slow down or that a trade-off between ASP and volume may be structural. Fuyao's 3Q26 earnings fell YoY, mainly because of higher selling cost (including a quality-related provision that should be fully covered by insurance in 4Q26 per company guidance) and a continued FX headwind. Fuyao's 3Q26 operating profit excluding FX impact fell 2% YoY, the first decline in the past three years, slightly below market expectations. Volume was stronger yet ASP weaker in 3Q26: revenue grew 3% YoY, similar to the single-digit growth in 1Q/2Q26, but with different volume/ASP mix;