Automobile Industry 02 (Oct 15 - Apr 23)

[winston]

China: DBS Group Research Projects National Policy to Support CN Auto Sales; Sector Top Pick BYD

China's PV sales dropped about 1% YoY in March, yet the related figure has not fully factored in the impediment of lockdown measures, DBS Group Research said in its report.

The pandemic lockdown in China is now impacting two key auto production hubs, namely Changchun and Shanghai.

Moreover, supply chain snarls also affected the auto OEMs in other regions.

Coincided with unfavorable consumption on China's economic slowdown, the auto sales decelerated.

The broker forecast that lockdown may erode 20% of total production volume of vehicles.

To avert further aggravation, Beijing announced broad directives to boost the vehicle market.

The broker predicted the local governments will roll out more details on initiatives such as sales subsidies and stimuli to boost sales and support the charging infrastructure development of NEVs.

In DBS opinion, NEV plays have better upsides. BYD COMPANY (01211.HK) is the sector top pick of the broker, given its sterling 1Q22 NEV sales. The broker kept BYD at Buy with a target price of $330.

Source: AAStocks Financial News

[winston]

Citi: CN Car Purchase Tax Cut Is Big Surprise, May Spur Extra Demand; Geely, GWM Key Beneficiaries

China's State Council announced 33 concrete measures to cement economic fundamentals in six aspects, including a phased vehicle purchase tax cut of RMB60 billion on some passenger vehicles (PVs).

Citigroup found this enough to support a purchase tax rate cut on ICE cars from 10% currently to 5%, for a term of 1.5 years.

Should it be launched from early June 2022, the stimulus will drive a 2-2.5 million incremental demand for China's ICE sector and thus act as a major and positive surprise.

GEELY AUTO (00175.HK) and GREATWALL MOTOR (02333.HK) will be the biggest beneficiaries from this measure.

The market could switch from NEVs and upstream-related companies to players in the traditional ICE sector.

Overall, GEELY AUTO was reaffirmed at Buy, with target price lifted from $14.96 to $17.89.

Source: AAStocks Financial News

[winston]

CN RMB60B PV Purchase Tax Cut To Fuel RMB1.2T Car Retail Sales: Analyst

At an Executive Meeting, the State Council pinpointed the mounting economic downside pressure at the moment and huge strains for many market entities, suggesting development as the foundation and key to solving all issues in China, reported Beijing Business Today.

It decided to roll out a package of 33 concrete measures in six aspects to cement economic fundamentals, including a phased vehicle purchase tax cut of RMB60 billion on some passenger vehicles (PVs).

This will comprise tax and fee reduction, financial support, consumption boost and effective investment to get the economy back to normal track.

Assuming China's car purchase tax rate cut from 10% to 5%, auto analyst Zhang Xiang projected a RMB60-billion tax reduction to fuel a retail sales value of RMB1.2 trillion.

This would translate into a sales volume of 8 million cars supposing an average selling price of RMB150,000 per vehicle, he added.

Source: AAStocks Financial News

[behappyalways]

U.S. Automakers Forced To Hike Prices Due To Rising Raw Material Costs
https://www.zerohedge.com/markets/us-au ... rial-costs

[winston]

Global sales of EVs rose to record high of 6.6 million in 2021, says IEA

by Surin Murugiah

Sales of electric vehicles (EVs) doubled in 2021 from the previous year to a new record of 6.6 million.

It said early 10% of global car sales were electric in 2021, four times the market share in 2019.

Sales in China more than doubling compared with the first quarter of 2021 (accounting for most of global growth), a 60% increase in the United States and a 25% increase in Europe.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... 1-says-iea

[winston]

China Autos – Stimulus expectations

Auto sector share prices are seeing a relief bounce today on the back of nnouncements that the China State Council will be providing a temporary vehicle tax reduction of CNY60b for passenger vehicles, which comes amongst the basket of thirty-three comprehensive measures announced across six categories to stabilise the economy that has been battered by the pandemic.

The vehicle tax reduction reported of ~CNY60b accounts for about 17% of 2021’s CNY325b total purchase tax receipts.

At this point, policy details are pending, although an initial assessment is that the vehicle tax reduction this round looks likely to benefit smaller size internal combustion engine (ICE) passenger vehicles, since new energy vehicles (NEV) are currently exempted from vehicle purchase tax in China, which is also supportive of “common prosperity” objectives.

In China’s previous auto sector stimulus programs in 2009 and 2015, the vehicle purchase tax rate was cut in both cases from 10% to 5% for vehicles with smaller engine size (below 1.6 litres).

This supported a rebound in new car wholesales growth from 7.2% year on year (YoY) in 2008 to 47.2% YoY in 2009 (post global financial crisis), aided by low car ownership penetration in early 2009.

Following continuous months’ decline during June-August 2015 (1.5% YoY growth in August 2015), which marked the first three-month period decline since January 2009, the next round of vehicle purchase tax cut boosted new car wholesales YoY growth to a more modest 17.6% in 2016.

Assuming the purchase tax this round is also reduced from 10% to 5% (similar to previous stimulus periods in 2009 and 2015) and the average selling price of vehicles is around CNY120k, Haitong Securities believes that a bullish estimate could imply a potential vehicle sales volume benefit of about 10m units, which compares favourably against the ~21m unit passenger vehicle sales volume achieved in 2021.

For this round of stimulus however, our base case is for a relatively smaller impact on demand recovery for passenger cars compared to previous periods of vehicle purchase tax cuts in 2015 and 2009.

This is due to the current pandemic related mobility restrictions, softer consumption appetite which will take time to recover and higher auto penetration levels.

Nevertheless, auto manufacturers which look positioned to see some benefit from the upcoming consumption stimulus include Geely and Great Wall, which have about 50-60% exposure of their cars sales with engine sizes below 1.6litres.

Source: OCBC

[winston]

CLSA Foresees CN Purchase Tax Cut to Drive 1-2M New PV Demand, Pull Auto Industry Out of Woods

The State Council announced a raft of economic stability measures, including an RMB60-billion car purchase tax concession.

CLSA expected the tax cut to drive a 1-2 million PV demand and help the sector ride out the difficult times.

The policy will benefit 8.13 million cars at an average price of RMB166,800, assuming it is applied to all ICEs for an estimated period of eight months.

11.3 million cars will be benefited at an average price of RMB120,000, if the purchase tax of small-displacement fuel cars below 1.6L is halved for 12 months.

Supposing an RMB5,000 subsidy per car, 12 million cars will be benefited for more than two years.

The policy shall be salubrious to GAC GROUP (02238.HK) and other players with high fuel car sales and good margins, as well as XPENG-W (09868.HK) and other NEV startups.

Source: AAStocks Financial News

[winston]

G Sachs: Cobalt, Lithium, Nickel Battery Metals Bull Mkt Is Over

Goldman Sachs estimated a fall in the prices of cobalt, lithium and nickel, being the three key battery metals, in the coming two years as green energy investors were rushing into the market too quickly.

Despite a demand spike, Goldman believed the battery metals bull market was over for now.

While long-term metals prospects stayed strong, the broker assumed a sharp lithium price correction given oversupply amid investor exuberance. The metal shall average under US$54,000/ ton this year, below the spot price of US$60,000/ ton. It would drop further to an average price of just over US$16,000/ ton in 2023.

Source: AAStocks Financial News

[behappyalways]

上路行駛不怕沒電 德新創業者研發充電馬路｜FOCUS午間新聞 20220614
https://m.youtube.com/watch?v=_joqygjAqaA

[winston]

Beijing offers cash subsidies to spur demand for new-energy cars

The financial aid provided by the city of Beijing, ranges from 8,000 yuan (US$1,196) to 10,000 yuan, for qualified buyers who scrap or resell cars owned for more than a year, among other conditions.

Follows similar measures announced by Shanghai late last month, that also involved raising a cap on car ownership and cutting a purchase tax for some passenger vehicles.

Passenger vehicle sales in China slid 17% in May from a year earlier, and not a single new car was sold in Shanghai in April.

Source: Bloomberg

https://www.theedgemarkets.com/article/ ... nergy-cars