Li Auto leads the auto stocks with the impact of the new car replacement subsidy, which is expected to boost auto sales in the second half of the year.

On Aug 16, the Ministry of Commerce and seven other departments issued a notice on further improving the work of trading in old cars for new ones. Among them, the purchase subsidy for new energy passenger vehicles has been increased from RMB 0.01 million to RMB 0.02 million. The purchase subsidy for fuel passenger vehicles has also been raised from RMB 7,000 to RMB 0.015 million. In addition, the policy for the first time includes the replacement of updates in the scope of subsidies. The country directly arranges special long-term national debt funds to support local governments to carry out replacement and update work independently.

Caixin Securities pointed out that with the further increase of the auto scrappage subsidy, the launch of a new round of new energy vehicles to the countryside, the reduction of new energy vehicle purchase tax, the support of vehicle financing credit, and the supporting discounts that enterprises have successively launched, the sales volume of cars in the second half of the year is expected to be further boosted. In the price range of 0.05-0.2 million, independent brand automakers with a higher proportion of sales of new energy products will benefit the most.