CICC: Two new policies support the off-season in passenger car retail in May. Suggestions focus on new car launch performance

The Zhitong Finance App learned that CICC released a research report saying that the Passenger Transport Federation released production and sales data for May, with 193.2/231.0/2.270 million passenger cars in the narrow sense of the word, +10.1%/+5.5%/+1.8% month-on-month, and +13.3%/+12.8%/+12.6% year-on-year. Despite being adversely affected by the Dragon Boat Festival holiday, passenger car retail sales achieved strong year-on-month growth in May, mainly due to activities such as scrapping and renewal, continuation of trade-in policies, and auto shows. High retail growth has driven the industry to drop warehouses, with manufacturers' inventories falling by 40,000 units and channel inventories by 70,000 units. Looking ahead, the base for the second quarter of last year was not high, and the renewal policy continued. Passenger car sales are expected to continue to grow at a good rate in June. It is recommended to focus on new car launch performance, such as the M8, Xiaomi YU7, Ideal i8, and Xiaopeng G7.

CICC's main views are as follows:

Recent developments in the industry

The Passenger Transport Federation released production and sales data for May: retail/wholesale/production of 193.2/231.0/2.27 million units in the narrow sense of the term, +10.1%/+5.5%/+1.8%, YoY +13.3%/+12.6%; passenger car exports (including complete vehicles and CKD) in May were 448,000 units, +13.5%/+6% YoY.

The two new policies supported the retail off-season in May, and NEV exports performed well

CICC believes that despite being adversely affected by the Dragon Boat Festival holiday, retail sales in May still achieved strong double-digit year-on-month growth, mainly due to activities such as scrapping and renewal, continuation of trade-in policies, and auto shows. High retail growth has driven the industry to drop warehouses, with manufacturers' inventories falling by 40,000 units and channel inventories by 70,000 units. In May, the total year-on-year growth rate of passenger car exports recovered to +12.6%, with new energy exports +80.9%/+5.8% month-on-month to 200,000 vehicles, accounting for an increase of 16.6ppt to 44.5% year-on-year, with impressive performance.

In May, the wholesale volume of new energy remained high, and BYD's exports reached a new high

In May, the wholesale sales volume of new energy passenger vehicles was +33.0%/+7.0% year over month to 1,216 million units, and the penetration rate was +8pct/+1pct compared to the same period last month to 52.6%. By structure, pure electric/plug-in hybrid/extended range accounted for 62.5%/27.7%/9.8%. Among them, pure electric models sold +37.7%/+4.4% year-on-month, outperforming plug-in hybrid models in stages, mainly benefiting from the high sales volume of A00 and A0 class economical pure electric models.

By brand: Zero Run delivered 45,000 vehicles in May, topping the sales list of new forces. The ideal sales volume was +20.4% month-on-month to 41,000 units, followed by Cyrus, Xiaopeng, and Xiaomi. BYD's total sales volume of 376,000 units declined slightly from month to month, but overseas sales reached a new high of 84,000 units; Geely Automobile/Chery sales were +9.9%/3.5% month-on-month; and Changan Automobile's sales volume was +47.8% month-on-month to 81,000 units, mainly due to the launch of new Deep Blue and Qiyuan cars.

Price wars and car company restructuring sparked market discussions; focus on major new car launches

Recently, car companies such as BYD have increased their terminal promotion efforts due to mid-year impulses, causing the market to worry about a new round of price wars. CICC believes that this round of BYD's increased promotion efforts has been anticipated. The actual decline is lower than apparent, and the impact on other car companies in the industry is relatively limited; price cuts will limit the profitability of car companies, but the increase in export share and sales growth are expected to form a certain hedging. Furthermore, the restructuring of the Armament Group has attracted market attention. CICC believes that the domestic market is currently at a stage where the low utilization rate of production capacity of some brands coexists with high pressure to expand production capacity of some brands, and the integration of car companies is expected to become a new trend in the future.

Looking ahead, the base for the second quarter of last year was not high, and the renewal policy continued. Passenger car sales are expected to continue to grow at a good rate in June. It is recommended to focus on new car launch performance, such as the M8, Xiaomi YU7, Ideal i8, and Xiaopeng G7.

Aspect of the target

Recommended attention: 1) Complete vehicles: Zero Sports (09863), Xiaopeng (09868), Geely (00175), Great Wall (02333), Ideal Auto (02015), etc. 2) RoboVan and epitaxial unmanned + concept: Xinquan Co., Ltd. (603179.SH), and related targets: HSAI.US (HSAI.US), Jingwei Hengrun (688326.SH), Youjiao Innovation (02431), weride, etc. 3) Parts: Xingyu Co., Ltd. (601799.SH), Tuopu Group (601689.SH), Jifeng Co., Ltd. (603997.SH), Songyuan Co., Ltd. (300893.SZ), etc. with improved 2Q performance. 4) Heavy truck: Sinotruk (000951.SZ,03808).

risk factors

The effects of the trade-in policy fell short of expectations, price competition was intense, and exports fell short of expectations.