The Zhitong Finance App learned that Open Source Securities released a research report saying that since March, car companies have continued to launch various forms of discounts. In particular, the comprehensive promotion range for new energy vehicles is expanding. In the short term, as the wave of price cuts has continued since 2023, consumers have a wait-and-see mentality, and the stimulating effect on sales is limited. However, in the long run, after prices are relatively stable, actual discounts are expected to boost terminal sales. The bank believes that subsequent sales growth in the passenger car market can be expected due to multiple factors such as the introduction of the trade-in policy, the continuous release of new models, the holding of offline events such as auto shows, and the wave of price reductions which is expected to stabilize.

Open source securities views are as follows:

March observation: The wave of price cuts by car companies continues, and trade-in policies and the like to stimulate a recovery in the car market can be expected

Since March, car companies have continued to launch various forms of discounts. In particular, the comprehensive promotion range for new energy vehicles is expanding. For example, BYD launched Honor Editions for models such as the Yuan Plus, Song ProDM-i, and Seagull, and Xiaopeng reduced the price of all models. The price reduction is mainly driven by factors such as reducing the cost of raw materials for new energy vehicles and seizing market share for fuel vehicles. In the short term, as the wave of price cuts has continued since 2023, consumers have a wait-and-see mentality, and the stimulating effect on sales is limited. However, in the long run, after prices are relatively stable, actual discounts are expected to boost terminal sales. In terms of sales, passenger car sales increased month-on-month in the first half of March due to a low base, and total sales growth in the late sprint quarter can be expected.
Looking forward to the future, subsequent sales growth in the passenger car market can be expected due to multiple factors such as the introduction of trade-in policies, the continuous release of new models, the holding of offline events such as auto shows, and the wave of price cuts is expected to stabilize. Furthermore, China's automobile market has entered an era where “increment and inventory coexist”, and there is plenty of room for scrapping and replacement demand. In this context, a trade-in policy was introduced, and the target is to increase the recycling volume of end-of-life vehicles by about 1 times in 2027 compared to 2023. The central financial administration will arrange energy saving and emission reduction subsidy funds to support the trade-in of eligible cars. It is estimated that at least 20 billion yuan will be invested, while local financial investment in trade-in is expected to be even greater, and car companies and dealers will also provide corresponding support. As far as consumers are concerned, trade-in can facilitate the sale of used cars, have car purchase subsidies, and is highly attractive, and demand for domestic NEVs is expected to be further stimulated.

Industry: Passenger car sales were under pressure in February due to the Spring Festival holiday, and the penetration rate of new energy passenger vehicles increased month-on-month

Under the influence of February being a low season for traditional car consumption, early release of demand for car purchases during the Spring Festival holiday, and a certain wait-and-see attitude among consumers, wholesale passenger car sales in February were -19.4% year-on-year, and -37.8% month-on-month. In terms of car companies, wholesale sales of car companies other than Wuling generally declined month-on-month, with Chery and Quanjie winning the top sales in the passenger car industry and new forces. In terms of new energy, the penetration rate of NEV passenger vehicle wholesale sales in February was 34.30%, +3.63pct year over year, and +1.77pct month-on-month. It is expected to be related to NEV companies seizing fuel vehicle market share through the introduction of preferential policies. The wholesale sales volume of plug-in hybrids accounted for 39.82% of NEVs, +9.78pct year-on-year, maintaining a relatively high level. In terms of exports, passenger car exports continued their year-on-year growth trend in February, and exports of new energy passenger vehicles declined slightly.

Intelligence: Report on the work of the government: boosting consumption such as intelligent connected vehicles, Tesla pushes FSD12.3 beta

In February, the policy side continued to increase the smart driving industry. The government work report proposed consolidating and expanding the leading edge in industries such as intelligent connected new energy vehicles and boosting consumption of intelligent connected new energy vehicles, etc. However, due to the relatively steady sales volume of the new M7 and the sharp decline in passenger car market sales, NOA penetration rate in passenger car market cities rose to about 2.7% in February. Furthermore, since February, automaker intelligence has progressed rapidly: (1) Tesla's FSD12.3 beta launch, Musk called it a “major release”; (2) ask M3 to add the NCA function in Wucheng District in March; (3) Xiaopeng Motor will push unlimited XNGP functionality; (4) DJI has released a “mobile platform” high computing power configuration. The “7V+100TOPS” solution is expected to enable 150,000 class passenger cars to be equipped with city pilotage functions that can be driven all over the country as standard.

Risk warning: Passenger car sales fall short of expectations, electrification falls short of expectations, and progress in smart driving technology falls short of expectations.