The Zhitong Finance App learned that Guotai Junan released a research report saying that, driven by policies such as trade-in, Q2 passenger car sales will accelerate; the supply of joint venture fuel vehicles will shrink, the introduction of own-brand NEV models will accelerate, and the NEV penetration rate is expected to rise again; as the share of export sales with outstanding profitability increases, the profitability of some independent brands is expected to exceed expectations. Under the combination of multiple factors, Q2 passenger cars started a sector market, with complete vehicles first and then parts.

Guotai Junan's views are as follows:

Driven by three factors: overall sales volume, NEV penetration rate, and profitability, Q2 passenger cars started a sector market. Driven by policies such as trade-in, Q2 passenger car sales will accelerate; the supply of joint ventures with fuel vehicles shrinks, and the introduction of own-brand NEV models accelerates, and the NEV penetration rate is expected to rise to the next level; as the share of export sales with outstanding profitability increases, the profitability of some independent brands is expected to exceed expectations. Under the combination of multiple factors, Q2 passenger cars started a sector market, with complete vehicles first and then parts.

The market's expectations for the strength and effects of the policy are insufficient, and passenger car sales are expected to start growing at an accelerated pace after the policy is implemented. The policy clearly states that by 2027, the amount of scrapped cars recycled will about double compared to 2023, and the volume of used car transactions will increase 45% compared to 2023. Under higher targets, we judge that the strength and sustainability of the subsequent policy is worth looking forward to; passenger car sales in China grew rapidly from 2009-2017, and this group of consumers have or are entering the car exchange cycle. The trade-in policy is more targeted, speeding up the release of renewal demand. With the implementation of relevant policies, we believe that monthly passenger car sales will begin to grow at an accelerated pace. The process can be compared to the 2022 sales trend after purchase tax relief.

The disturbance is over, and the penetration rate of new energy sources and the market share of independent brands continue to rise, reaching a new level. From December 2023 to February 2024, the NEV penetration rate fluctuated due to a mismatch between fuel vehicles and NEV promotions, and the NEV penetration rate gradually recovered in March. Q2 joint venture car companies are shrinking fuel vehicle production capacity, while their own brands of low, middle, and high-end new energy models continue to be launched. We expect the NEV penetration rate to continue to increase as the supply side changes. The replacement of independent brands with joint venture brands will accelerate in various price ranges, and the market share of independent brands will rise to the next level.

Thanks to export contributions, vehicle profits are likely to exceed expectations, and spare parts profits will remain stable. Considering the price of raw materials and the actual transaction price of terminals, the intensity of the passenger car price war since 2024 has not increased significantly compared to 2023. At the same time, independent brands are fully exploiting overseas markets in 2024, and the profitability of the export market is significantly better than domestic, and the net profit of car companies with a clear increase in export share is likely to exceed expectations. The profits of parts companies will also remain stable due to the scale effect. With the disclosure of quarterly statements, market concerns about annual downward pressure will gradually subside.

Risk warning: Export sales due to international trade barriers are lower than expected; profits from further price competition among some car companies are lower than expected