Automotive industry: Expected to enter the "fast track"

The automotive industry has entered a situation of prosperous production and sales. The profitability of the industry has already reached the peak of 2004. According to the latest statistics from the China Association of Automobile Manufacturers, this year's industry-wide warming of the auto industry is a foregone conclusion. From January to August of this year, the total profit growth of domestic automobile manufacturing industry was 63.87% year-on-year. The industry believes that the recent decline in international oil prices, in addition to stimulating auto consumption, will also reduce auto manufacturing costs, so the car industry's profit growth during the year will continue to maintain.

Industry development continues to maintain modest growth

From January to September 2006, the production and sales of automobiles continued to grow at a relatively fast pace, and the production and sales of various types of automobiles were 5.25 million and 5.15 million, respectively, a year-on-year increase of 25%. The production and sales rate was 98%, showing a slight increase. However, because of the effect of the 11-day holiday, the production and sales in October will inevitably show a downward trend. In the sub-model summary, the production and sales of passenger cars have historically approached 3.7 million, and in particular, the sedan continues to maintain rapid growth, with over 2.7 million vehicles in January-September, among which the economic car has the most obvious pulling effect; commercial vehicles are Continued to maintain steady development, passenger cars continue to maintain rapid growth, and semi-trailer tractors also showed a clear recovery of growth.

Profit from automobile manufacturing continues to remain strong

According to data from the China Association of Automobile Manufacturers, the revenue and profit scale of the automobile manufacturing industry (including automobiles and modified cars) remained strong from January to September. The growth rate of income accelerated and the profit growth slowed slightly. The sales revenue in September reached 78.354 billion yuan, the second highest since March 2006, and the total profit was 3.285 billion yuan, an increase from the previous month. January-September sales reached 618.593 billion yuan, an increase of 29.03%.

The new features of "recovery of car growth and accelerated growth of commercial vehicles" continue to be strengthened

Although the basic pattern of “crushed passenger vehicles and fast-moving commercial vehicles” will not change, it is expected that the new characteristics of the increase in sales growth of cars and the acceleration of sales growth of commercial vehicles in August will continue to be strengthened. The emergence and strengthening of this new feature has not only been related to the differentiation of the base level over the same period of the previous year, but also related to the cyclical changes in the consumer demand for passenger vehicles and the investment demand for commercial vehicles. We expect that passenger cars and MPVs in passenger cars and passenger cars and medium- and heavy-duty trucks in commercial vehicles will continue to grow well in November.

Cars, especially passenger cars, continue to be in the mid-term double boom phase

After the traditional off-season in July-August, the automobile manufacturing industry rose further in September. It may show a slight drop in the month-on-month in October but still show a rapid growth year-on-year. In general, China's automobile industry, especially passenger vehicle manufacturing, continues to maintain its medium-term boom. Various positive and negative industry influence factors are eroding each other. Positive factors are expected to continue to be in a dominant position in the short-to-medium term and promote the industry to maintain the dual-boom characteristics of “growth boom” and “benefit boom”. Significantly, commercial vehicles began to show a certain degree of "growth boom" trends.

The car industry will usher in a new round of sales season

After experiencing a relatively slack season in the third quarter, consumer demand began to accumulate, and prices will also stabilize in the fourth quarter. Most of the manufacturers have already completed vehicle model updates and price adjustments. Therefore, we believe that the car industry will usher in a half year. The above sales season.

Heavy truck industry continues to accelerate growth, and buses continue to grow steadily
In the third quarter, commercial vehicles and major fine-molecule industries continued to grow steadily. Among them, the heavy-duty truck industry has entered a stage of rapid growth. Large-tonnage manufacturers not only grow faster, but also erode the market share of Dongfeng Motor and FAW Group. The big customer industry still maintains a relatively stable development trend.

The Influence of Oil Price on the Value Chain of Automobile Industry

Oil prices will have an impact on the value chain of the automotive industry. On the one hand, oil is the raw material for intermediate products such as plastics, rubber, leather, and chemical fiber needed in the automobile manufacturing process. The rising or falling of oil prices will cause automobile manufacturers' manufacturing costs to increase or decrease. On the other hand, oil prices will directly affect the cost of automobile use. The price of oil will increase the cost of use and suppress the demand for cars. On the contrary, the drop in oil prices will stimulate demand for cars and thus affect the demand for cars.

The correction of oil prices from the analysis of manufacturing costs benefits both the profitability of the auto industry and the traditional peak season of auto sales in the fourth quarter. The performance of auto companies is expected to increase in the fourth quarter.

Suggested attention:
For the Chinese automobile manufacturing industry in November and in the future, we propose to adopt the basic investment strategy of “holding high themes of professional advantages and capturing the overall listing themes”:

1. Automobile manufacturers with advantages or leading positions in one or more fine-grained industries, such as: Jianghuai Automobile (600418), Jiangling Motors (000550)

2. Pay close attention to the auto manufacturing companies that are or are likely to implement the overall listing plan or related asset acquisition in the new capital market environment, such as: Shanghai Automotive (600104), S Xiang Torch (000549), Jinpan (000572) Ankai Bus (000868) and Dongan Power (600178)

3, large-scale blue chip companies, such as: Shanghai Automotive (600104), Changan Automobile (000625)

4, medium-sized growth companies, such as: Jianghuai Automobile (600418), S Xiang torch (000549)