24H2 continues to exert the old-for-new policy and expands overseas markets for car companies, which has benefited the steady improvement of automotive sales.
China Securities has released a research report stating that the continuous efforts of 24H2's old-for-new policy and the expansion of overseas markets for car companies have beneficially supported the stable growth of automotive sales. The growth of overseas sales is an important support for the industry, with exports reaching 0.539 million vehicles in September 2024, up by 5.4% month-on-month and 21.4% year-on-year; from January to September 2024, total automotive exports reached 4.311 million vehicles, up by 27.4% year-on-year and 14.3% month-on-month. In addition, heavy-duty truck sales in September were 57,712 units, down by 7.6% month-on-month and 32.7% year-on-year. The peak sales season for heavy-duty trucks in September and October saw weak demand, resulting in no year-on-year growth.
Key viewpoints of Shanxi Securities are as follows:
The overall automotive market is improving, with market sales in Q4 2024 expected to be positive. The continuous efforts of 24H2's old-for-new policy and the expansion of overseas markets for car companies have supported the steady improvement of automotive sales. In September 2024, automotive sales reached 2.809 million vehicles, up by 14.5% month-on-month but down by 1.7% year-on-year. From January to September, cumulative automotive sales reached 21.571 million vehicles, up by 2.4% year-on-year. The growth of overseas sales remains a key driver of industry growth, with exports reaching 0.539 million vehicles in September 2024, up by 5.4% month-on-month and 21.4% year-on-year; from January to September 2024, total automotive exports reached 4.311 million vehicles, up by 27.4% year-on-year and 14.3% month-on-month.
Passenger vehicle sales continue to show a positive development trend, with the penetration rate of new energy vehicles steadily increasing. In September 2024, passenger vehicle sales reached 2.525 million vehicles, up by 15.8% month-on-month and 1.5% year-on-year, showing improvement in both month-on-month and year-on-year comparisons. The penetration rate of new energy vehicles has significantly increased compared to the beginning of the year, reaching over 50% in July, 54% in August, and 53% in September, up by 43.2% year-on-year.
The market share of independent car companies is steadily increasing, now exceeding 60%. By vehicle type, in September, sedan, SUV, and MPV sales were 1.053 million, 1.362 million, and 0.089 million units respectively, with year-on-year changes of -2.0%, +7.0%, and -23.3%, and month-on-month changes of +18.2%, +14.5%, and +10.8% respectively. The MPV share is relatively stable, SUV share is consistently rising, and sedan share is gradually declining. In September, sales of independent brands reached 1.337 million vehicles, maintaining the same share as in August at 63.4%, a significant increase compared to the 16.6% share of German brands and 12.6% share of Japanese brands.
The share of hybrid models represented by plug-in hybrids and range extenders is increasing significantly and is expected to become a key focus for car companies in the future. According to the data from the China Passenger Car Association, in September, wholesale sales of pure electric vehicles reached 0.723 million units, up by 27.1% year-on-year and 22.5% month-on-month; plug-in hybrid sales were 0.394 million units, up by 102.2% year-on-year and 12.3% month-on-month; range extender wholesale was 0.114 million units, up by 68.4% year-on-year and 4.5% month-on-month. In the wholesale structure of new energy vehicles in September, pure electric vehicles accounted for 59%, plug-in hybrids 32%, and range extenders 9%, compared to 68% pure electric, 23% plug-in hybrids, and 8% range extenders in September 2023.
Key auto companies saw a rapid increase in sales in October, in line with market expectations. BYD Company Limited sold 0.503 million vehicles in October, up +19.8% month-on-month and +66.5% year-on-year; Geely Auto sold 0.227 million vehicles in October, up +12.2% month-on-month and +25.4% year-on-year, with sales steadily rising.
The commercial vehicle industry remains in a downturn, awaiting demand recovery. In September 2024, commercial vehicle sales were 0.284 million vehicles, up +4.4% month-on-month and down -23.5% year-on-year. From January to September, cumulative commercial vehicle sales were 2.892 million vehicles, down -1.6% year-on-year. Heavy truck market sales in September reached 57,712 vehicles, down -7.6% month-on-month and -32.7% year-on-year. September to October, traditionally a peak sales period for heavy trucks, demand remained weak, with no year-on-year growth.
Investment advice
It is suggested to focus on companies with strong product system capabilities, upward business cycles, and strong expectations for new vehicle models and products in the entire vehicle segment. Recommendations include Huawei's entire vehicle sector: Chongqing Sokon Industry Group Stock, Anhui Jianghuai Automobile Group Corp., Ltd., and BAIC Bluepark New Energy Technology; Geely Auto; BYD Company Limited.
The intelligent automotive parts industry chain has great potential for domestic substitution and value enhancement, a relatively good competitive landscape, high customer stickiness, and currently at historically low valuation levels, suggesting a key focus. Recommendations include Huizhou Desay SV Automotive, Keboda Technology, J&J Hengrun Technology, Shanghai Baolong Automotive Corporation, and Horizon Robotics - W.
The hybrid industry chain has a good competitive landscape, making it easy to build a 'cash cow + star business' commercial model with both real performance and valuation enhancement. Recommendations include Guilin Fuda Co.,Ltd., Hangzhou XZB Tech, Hunan Oil Pump, Wuxi Best Precision Machinery; targeting the global market beyond the automotive industry, companies with good product and customer expansion capabilities are likely to continue growing. Recommendations include Zhuzhou Times New Material Technology, Zhejiang Yinlun Machinery, Zhejiang XCC Group, Chengdu Haoneng Technology; speeding up the construction of the new energy intelligent connected vehicle standard system, the aftermarket for new energy vehicles is expected to be activated. Recommendations include China Automotive Engineering Research Institute, Shenzhen Anche Technologies.
Humanoid robots and flying cars are important future directions for the industry, expected to open up industry growth space. Intelligent, electrified, and automotive aftermarket sectors still have significant room for improvement and exploration. Under the drive of industry trends, local component enterprises are expected to continue to grow and strengthen through organic development and M&A. Therefore, we give the automotive industry a "leading the market-A" investment rating.
Risk Factors: Slower-than-expected growth in automobile production and sales; significant fluctuations in raw material prices; overseas geopolitical risks; unexpected developments in new technologies.
