20230925-招银国际-China_Auto_Sector__More_NEV_model_rollouts_as_a_positive_catalyst_22页_1mb

CMB International Global Markets: China Auto Sector Update

Date: Sep 25, 2023
Analysts: SHI Ji, DOU Wenjing, GU Sijie

Key Highlights

China Auto Market Performance

• Retail Sales Volume (Aug 2023): +2% YoY, reaching 1.92mn units.
• Wholesale Volume (Aug 2023): +7% YoY, setting a record high at 2.27mn units.
• NEV Market Growth: NEV retail volume rose 35.4%, with a trailing 12-month market share of 30.9%.

NEV Segment

• Market Share by City Tier: NEV adoption is accelerating in lower-tier cities (Tier-4 & below), outperforming Tier-1 cities in YoY growth.
• BYD & Tesla Dominance: BYD led NEV sales with a 26.0% market share in the BEV segment, while Tesla contributed 13% to total NEV growth.
• Exports: BYD became China's largest NEV exporter with 25,000 units in Aug 2023, contrasting Tesla's decline.

Inventory & Price Trends

• Dealer Inventories: NEV inventory levels reached 1.9 months, driven by restocking in Q1-Q2 2023.
• Discounts: BYD maintained the lowest discounts among automakers, while luxury brands like Lexus faced significant YoY declines.

Company Performance

• Great Wall Motor: +29% YoY wholesale growth, but NEV market share declined to 27% amid model transitions.
• Geely: Strong NEV performance (+309% YoY for Li Auto units), but discounts widened.
• BYD: Record-breaking wholesale volume (+58% YoY), driven by models like Dolphin EV and Yuan Plus.

Trends & Outlook

• NEV Penetration: Chinese brands' ICE market share rose to 47% in the trailing 12 months.
• New Models: Over 48 NEV models launched in H1-H2 2023, with another 11 expected in Q4 2023.
• City Policies: Shanghai's NEV subsidy extension may boost Q4 sales.

Recommendations

• BUY: Li Auto, BYD (China operations)
• HOLD: NIO, Xpeng, Geely (Aion)
• OUTPERFORM: China Auto Sector due to sequential NEV market share rise and export potential.

Data Sources

• CATARC, CPCA, Thinkercar, CMBIGM
• Endnotes: Analyst certifications and disclosures on pages 22-23.