The scope of support for car scrap renewal has been expanded, and the level of bicycle subsidies has remained the same as in 24 years. Passenger car terminal sales are expected to increase slightly in 25 years.
The Zhitong Finance App learned that GF Securities released a research report saying that the 24-year trade-in policy stimulus is different from historical preferential purchase tax policies, and the impact of demand overdrafts may be small. This stimulus is different from historical purchase tax preferential policies. The preferential purchase tax policy is an overall stimulus to first-purchase/additional purchase/exchange demand, and the current trade-in policy mainly stimulates exchange demand by speeding up the renewal rate. Regarding scrapping subsidies, assuming that the 25-year passenger car scrapping rate and the proportion of new cars purchased after recycling remained the same as in 24, the increase in sales volume due to the 25-year scrapping subsidy was about 0.82 million vehicles, which contributed 3.6% of domestic passenger car terminal sales flexibility in 25 years; for renewal subsidies, it is assumed that the 25-year replacement subsidy stimulates sales to remain flat for 24 years (the actual policy stimulus period is longer).
The main views of GF Securities are as follows:
The scope of support for car scrap renewal has been expanded, and the level of bicycle subsidies has remained the same as in 24 years
On January 8, 2025, the National Development and Reform Commission and the Ministry of Finance issued the “Notice on Strengthening the Expansion and Implementation of Large-scale Equipment Renewal and Consumer Goods Trade-in Policies in 2025”: (1) Expanding the scope of support for automobile scrapping and renewal; (2) The national scrapping subsidy for passenger bikes remains unchanged: 0.02 million yuan for the purchase of a new energy passenger car, 0.015 million yuan for the purchase of a single fuel passenger car with a displacement of 2.0 liters or less; (3) The local replacement subsidy for passenger cars with passenger cars with a displacement of 2.0 liters or less is basically the same as in 24 years: the subsidy for the purchase of new energy passenger bikes is basically the same as in 24 years: The maximum subsidy is no more than 0.015 million yuan, and the maximum subsidy for the purchase of a fuel-fueled passenger car is no more than 0.013 million yuan.
Review: The 24-year trade-in policy is expected to stimulate sales of about 1.9 million units. The effective stimulus period is about 4 months, and the impact of policy overdraft is manageable
The 24-year trade-in policy stimulus is different from historical preferential purchase tax policies, and the impact of demand overdrafts may be less. This stimulus is different from historical purchase tax preferential policies. The preferential purchase tax policy is an overall stimulus to first-purchase/additional purchase/exchange demand, and the current trade-in policy mainly stimulates exchange demand by speeding up the renewal rate. According to China Automobile Center data, the proportion of new H1 passenger cars purchased in '24 was 40.1%. The 24-year passenger car trade-in policy had pre-existing restrictions, which had little impact on first-time purchase demand, which still accounts for around 60%.
Outlook: Passenger car terminal sales are expected to increase slightly in 25 years, taking into account the following factors:
(1) The 24-year trade-in policy stimulus is different from historical preferential purchase tax policies, and the impact of demand overdrafts may be small; (2) the amount of holdings eligible for passenger car scratch/replacement subsidies is still large; (3) the 24-year policy stimulus is valid for about 4 months, and the 25-year trade-in policy stimulus period is even longer. Passenger car terminal sales are expected to increase slightly in 25 years. Specifically, with regard to scrapping subsidies, assuming that the 25-year scrapping rate of passenger cars and the proportion of new cars purchased after recycling is the same as in 24 years, the sales increase due to the 25-year scrapping subsidy is about 0.82 million vehicles, corresponding to contributing a 25-year domestic passenger car terminal sales elasticity of 3.6%; for renewal subsidies, it is assumed that the 25-year replacement subsidy stimulates sales at the same level as 24 years (the actual policy stimulus period is longer).
Investment advice: Many structures support superposition policy maintenance, and look forward to breaking out of deflation in 2025
On the passenger car chain: those marked on the right (comprehensive business side, same below): BYD (01211), Celis (601127.SH), Xiaopeng Motors (09868), LEAPMOTOR (09863); those marked on the left: Great Wall Motors (601633.SH,02333), Changan (000625.SZ); inflection point (soon or already): SAIC Motor Group (600104.SH).
On the passenger car parts chain: those marked on the right: Silver Wheel Co., Ltd. (002126.SZ), Bethel (603596.SH), Top Group (601689.SH), iKodi (600933.SH), Fuyao Glass (600660.SH,03606), Zheng Meiji (601717.SH,00564), China Automobile Research (), Xinquan (Dow), Baolong Technology (), Huayang Group (002906.SZ), etc.; marked on the left 601965.SH 603179.SH 603197.SH : New coordinates (603040.SH); inflection point (soon or already) targets: Minshi Group (00425), Nexteer (01316), Jifeng Co., Ltd. (603997.SH), etc.
Risk warning: Policy effects fall short of expectations; industry sentiment declines; industry competition intensifies.
