In December, the car market is expected to see rapid growth in sales due to the approaching policy deadlines, the accelerated effects of the trade-in policy, and the high demand for new cars. Both New energy Fund and RBOB Gasoline vehicles are expected to show growth, with the retail end's electrification rate projected at 52%.
According to the Zhitong Finance APP, Kaiyuan Securities has released a Research Report stating that in December, the automobile market is expected to see rapid growth in sales compared to both year-on-year and month-on-month due to the impending end of policies, accelerated effects of the trade-in policy, and high demand for new vehicles. Both Electric Vehicles and RBOB Gasoline vehicles are expected to see growth, with the electrification rate at the retail level projected to be 52%. Looking ahead to 2025, early projections indicate there will be some pressure, and the latter half will face a high baseline due to the policy stimulus in 2024. However, the Ministry of Commerce previously indicated plans to prepare for the 2025 trade-in follow-up policies, along with other consumer stimulus policies, which are expected to provide some support for sales.
In terms of structure: (1) The penetration of Electric Vehicles is expected to continue, with high-level intelligent driving likely to experience accelerated penetration. The potential introduction of Tesla’s FSD in China may trigger a catalytic effect, likely prompting leading companies like Huawei, XPeng, and Li Auto to accelerate their technical advancements and gradually gain consumer recognition for intelligent driving. Meanwhile, the key to accelerating the penetration of intelligent driving lies in cost reduction, with BYD and XPeng expected to push for equality in intelligent driving strongly by 2025. (3) Exports may slow down in the short term, although the easing of EU tariff policies is a Bullish sign, and the deployment of overseas capacity will still require time.
BYD is pursuing both "cooperation + self-research" in its smart technology.
In terms of cooperation, the Equation Leopard is equipped with Huawei ADS 3.0 and has partnered with Momenta for algorithm development, which has been adopted in multiple models including Han. In collaboration with DJI, it has controlled intelligent driving costs and made significant progress towards "intelligent driving equality". On the self-research front, the "Eye of Heaven" high-level intelligent driving has been iterated to BAS 3.0+, with the function for uncharted city navigation being gradually PUSHed from December 24. Intelligent driving is now the area that Wang Chuanfu values the most, with plans to invest 100 billion yuan; the models equipped with intelligent driving lead in China and have a rich database. The scale effect and vertical integration of the Industry Chain push down costs in intelligent driving, solidifying dominance in mainstream price segments.
Review of November: Policy stimulus continued to drive the enthusiasm of the "golden September and silver October" period, with passenger vehicle wholesale and retail reaching new highs.
In November, policy stimulation led to new highs in both retail and wholesale, with the penetration rate of Electric Vehicles exceeding 50% for five consecutive months. In terms of intelligent technology, Huawei has introduced D2D (Beta), and BYD's "Eye of Heaven" has launched uncharted city NOA.
New vehicle outlook: BYD's mainstream/high-end brands are making a strong push, while Chongqing Changan Automobile's New Energy brand begins a strong new vehicle cycle.
BYD Qin PLUS DM-i has been declared, with DM 5.0 prices expected to further dip; the new Sea Gull incorporates several cameras, significantly enhancing intelligent driving capabilities; Titanium 3 is entering the home hard-core market, enriching the product matrix of the Equation Leopard. Chongqing Changan's Deep Blue S09, Qiyuan C798, and Avita 06 are all showcased, signaling a strong new vehicle cycle expected to improve profitability.
Investment advice: Policies are likely to continue, with demand being supported and intelligent driving about to accelerate penetration; pay attention to the leading players in intelligence.
Kaitian Securities believes that policies are likely to persist with demand support, focusing on development opportunities for leading players in intelligence, prioritizing leading companies such as Huawei's system and new forces like Xiaopeng and Li Auto, while BYD is expected to fill gaps and strengthen its position as a leader in New Energy after enhancing its intelligence.
(1) BYD DM5.0 technical dividends continue to be released, with new technologies like the second-generation blade Battery expected to be launched; high-end brand products and channels continue to enrich, with intelligence set to become an important marginal change for the company by 2025, and overseas market capacity expected to ramp up quickly starting from the end of 2025; (2) Chongqing Changan's Deep Blue, Qiyuan, and Avita's new vehicle cycles are strongly starting, expected to gradually turn losses into profits while proactively laying out in robotics and other fields; (3) Great Wall Motor's Tank Hi4-Z and overseas expansions bringing incremental benefits, while Wei brand's new vehicle cycle is starting with substantial increments.
(4) The sales performance of the Aito M7/M9 is impressive, and the M8 is expected to be launched; Anhui Jianghuai Automobile Group's premium vehicle enhances profitability, while BAIC BluePark New Energy Technology's ARCFOX sales are climbing, expected to welcome the launch of models like the Enjoy S9 range-extended edition; (5) SAIC is receiving strong support from the government and implementing top-down reforms, expected to accelerate its electric intelligent transformation in collaboration with excellent suppliers; (6) Geely Galaxy is creating the 'E5+Star Wish' bestseller, with the Thunder EM-i comparable to DM5.0, while Lynk & Co and ZEEKR are integrating to leverage scale effects; (7) New forces such as Xiaopeng are likely to continue launching blockbuster vehicles.
Recommended symbols: BYD (002594.SZ), Chongqing Changan Automobile (000625.SZ), Great Wall Motor (601633.SH), Xiaopeng Motors-W (09868), benefiting symbols: SAIC Group (600104.SH), Chongqing Sokon Industry Group Stock (601127.SH), Anhui Jianghuai Automobile Group Corp.,Ltd. (600418.SH), Li Auto-W (02015), BAIC BluePark New Energy Technology (600733.SH), Geely Automobile (00175), LEAPMOTOR (09863), NIO-SW (09866).
Risk reminders: Industry demand/electric intelligent transformation/overseas expansion/policy support may not meet expectations, competition intensifies, etc.
