The Zhitong Finance App learned that Everbright Securities released a research report saying that the scope of car trade-in subsidies in this round is in line with expectations, and that the amount of bicycle subsidies is similar to last year. It is expected to steadily promote car consumption before and after the holiday season and boost car sales in 2025. It is expected that in 2025, the trade-in policy guidelines will be more standard, and the amount of bicycle subsidy will be similar to last year; under the circumstances where the trade-in policy subsidy cycle is longer and the scope of subsidies is wider, the rolling release of domestic demand for replacement purchases is expected, and the effect of boosting sales throughout the year is still expected. The triple subsidies of state subsidies, local subsidies, and preferential subsidies from car companies are beneficial to car purchases and consumption.

The main views of Everbright Securities are as follows:

Increased subsidy coverage and increased flexibility

On January 8, the National Development and Reform Commission and the Ministry of Finance issued the “Notice on Strengthening Expansion and Implementation of Large-scale Equipment Renewal and Consumer Goods Trade-In Policies in 2025”. This round of policies is based on the original 2024:

1) Expand the scope of vehicle scrapping and renewal support: Include eligible passenger vehicles with four national emission standards and new energy passenger vehicles within the scope of used vehicles that can apply for scrapping and renewal subsidies, that is, gasoline vehicles registered before 2012/6/30, diesel and other fuel vehicles registered before 2014/6/30, and new energy vehicles registered before 2018/12.

2) Vehicle replacement and renewal subsidies set a maximum bicycle limit: individual consumers transfer a passenger car registered under their name and buy a new passenger car, the maximum subsidy for purchasing a single NEV passenger car shall not exceed 0.015 million yuan, and the maximum subsidy for the purchase of a single fuel-fueled passenger vehicle shall not exceed 0.013 million yuan.

3) Raise the subsidy standard for new energy city buses and power batteries: For city buses that are 8 years old or older and power batteries that have exceeded the warranty period, the average maximum subsidy amount per vehicle has been raised from 0.06 million yuan to 0.08 million yuan. In this round of subsidies, the central government and local governments are responsible for the subsidy according to a 9:1 funding ratio.

The scope of this round of car trade-in subsidies is in line with expectations, and the amount of bicycle subsidies is similar to last year. It is expected to steadily advance car consumption before and after the holiday season and boost car sales in 2025.

The total number of passenger cars that meet the subsidy criteria is close to 19 million, and sales can be expected to boost for the full year of 2025

Currently, the central government has pre-issued a total trade-in capital of 81 billion yuan for consumer goods. For 2025 car trade-ins:

1) The scope of scrapping and replacement at the central level has been extended to national 4. The amount of bicycle subsidies is similar to last year; we expect the total number of eligible passenger cars to be around 19 million.

2) The maximum amount of bicycle replacement and renewal subsidies at the local level (or similar to the average bicycle subsidy level in each province and city last year).

3) The total number of applications for vehicle scrapping and replacement in 2024 is approximately 6.5 million vehicles.

It is expected that in 2025, the trade-in policy guidelines will be more standard, and the amount of bicycle subsidy will be similar to last year; under the circumstances where the trade-in policy subsidy cycle is longer and the scope of subsidies is wider, the rolling release of domestic demand for replacement purchases is expected, and the effect of boosting sales throughout the year is still expected.

Triple subsidies benefit car purchases

1) Local subsidies: More than 10 provinces and cities have announced the 2025E continuation of the automobile subsidy policy. With the implementation of the central government and local finance trade-in subsidy guidelines, more regions are expected to follow up and increase the coverage of trade-in subsidies.

2) Car company discounts: Most car companies are also the first to launch price reduction promotions, with their own brands following up and the widest range of models. Among them, traditional independent brands mainly use a combination of limited-time cash discount+replacement subsidy, with a cumulative discount of 0.02-0.03 million yuan; in addition to the above promotions, new forces have added zero-interest financial plans, including Ideal, Music, etc., to promote upfront consumption.

(As of 2025/1/8)

The current policy direction is in line with the automobile consumption environment (1H24 increases the share of consumers purchasing 40% +); optimistic about the prospects for 2025E vehicle consumption release under the influence of multiple subsidies; focusing on the sales volume of new 2025E models to meet highly flexible targets; 2025E intelligence may continue to become a competitive highland in the industry, focusing on investment opportunities in intelligent themes.

Investment recommendations:

Vehicle: We recommend BYD shares (01211), and it is recommended to focus on Tesla (TSLA.US), Xiaopeng Automobile-W (09868), NIO-SW (09866), and Geely (00175).

Parts: Fuyao Glass (03606,600660.SH) is recommended, and Jifeng Co., Ltd. is recommended (603997.SH).

Risk warning: Risk of global trade frictions and policy fluctuations; sales climbing and growth falling short of expectations; intensifying market competition+price reduction exceeding expectations; global layout falling short of expectations; intelligent progress falling short of expectations.