Retail sales of passenger cars reached 1.39 million units in February, up 10.4 per cent from a year earlier and 7.5 per cent month-on-month, according to data released by the Federation of passengers on March 8. Among them, retail sales of new energy passenger cars reached 439000 in February, up 61.0 percent from the same period last year and 32.8 percent from the previous month, with an overall year-on-year growth rate of 22.8 percent in the first two months of this year.

Manufacturers in the passenger car market sold 1.618 million vehicles wholesale in February, up 10.2% from the same period last year and 11.7% from the previous month. Among them, wholesale sales of new energy passenger vehicles reached 496000 in February, an increase of 56.1% over the same period last year and 27.5% month-on-month growth.

Data show that the wholesale penetration rate of new energy vehicle manufacturers in February was 30.6%, up 9 percentage points from 21.6% in February 2022.

The Federation said that new energy sales fell sharply in January this year, and the new energy vehicle market was gradually adjusted in February. March is the month of new product launch, and a large number of new cars from most manufacturers are about to kick off. Driven by the national consumption promotion policy, many provinces and cities have issued corresponding consumption promotion policies, and the full recovery of offline activities such as auto shows will also accelerate the gathering of popularity.

New energy vehicle sales fell for the first time in January compared with the same period last year, and although the new energy vehicle sales data rebounded somewhat in February, overall, it is still relatively weak. Since the beginning of February this year, the stock price of ETF related to the new energy vehicle industry chain has been adjusted back continuously. This correction is mainly due to the decline in the growth rate of car sales data.

In February, of the 32 domestic automobile listed companies, except for the suspension companies, only 10 stocks achieved month-on-month increase in share prices, and the market capitalization of domestic vehicle listed companies decreased by 154.346 billion yuan in February.

It is worth noting that Hubei recently launched a car purchase discount season. It is reported that a number of car brands are heavily subsidized by government and enterprises, including Dongfeng, Buick, Toyota and other cars, of which Dongfeng brand subsidies are the highest, with some models subsidizing up to 90,000 yuan.

Whether it is Dongfeng Nissan, Dongfeng Citroen, FAW Toyota and Buick, they all have a common identity-joint venture cars. This time, Hubei's subsidies are mainly focused on joint venture car brands, which are facing declining sales in China.

The decline in the market share of joint venture vehicles is mainly due to the rapid development of the electric vehicle market in recent years, and electric vehicles are in fact intelligent vehicles in addition to new energy. Joint venture vehicles are generally relatively backward in the degree of intelligence, while the market share of fuel vehicles is declining. under the double squeeze, there has been a reduction in market share and a backlog of inventory.The "fire" of the price reduction of new energy vehicles eventually hit the fuel vehicles.

Overall, although the market capitalization of most car companies fell in February, institutions are still bullish on the sector.

The federation said that in March, Hubei Province launched an one-month car purchase subsidy policy with unprecedented concessions from enterprises and the government, demonstrating the policy determination of major automobile provinces to stabilize and promote automobile consumption. At present, the size of the people who come to the store and order is better, which may form a siphon effect on the sales structure of the central provinces in the short term.

Dongguan Securities said that the domestic economic recovery, the recovery of purchasing power will be conducive to the growth of demand for new energy vehicles, although the annual sales growth is expected to slow, but will still achieve rapid growth.

According to a research report released by Morgan Stanley, sales discounts among Chinese car dealers increased in the second half of 2022 due to the epidemic, but after-sales service will be affected by the economic return to normal after the optimization of prevention and control policies, which is expected to be the main driver of growth this year.

In addition, Goldman Sachs Group channel research results show that new car sales demand and dealer discounts have rebounded continuously, especially high-end models. Driven by a reopening-driven rebound in consumer sentiment, the bank expects high-quality demand to respond positively as these potential customers have less impact on spending power during the outbreak, but as the economy recovers, willingness to spend will become stronger and stronger.

Minsheng Securities said that the continued volume of electric intelligence, the accelerated restructuring of the upstream supply chain, the superimposed repair of fundamentals brought about by the stabilization of raw material prices, and firmly optimistic about the auto parts sector with electric intelligent properties. It is recommended to focus on intelligence, thermal management, and lightweight core tracks.