Source: Guotai Junan Securities Research
summary
The sector has entered a recovery period, and support policies are expected to heat up.After experiencing a period of price chaos from March to April, demand for passenger cars gradually returned to normal. At the same time, after experiencing the Shanghai Auto Show, the sales penetration rate of new energy vehicles is expected to soar again. The sector enters a recovery period, and the market's overly pessimistic expectations about sales volume and supply chain profitability will gradually be revised. At the same time, policy expectations will further heat up as the National Standing Committee passes implementation opinions such as better support for new energy vehicles to go to the countryside.
It is expected that the policy of new energy vehicles going to the countryside will continue, driving a further increase in third- and fourth-tier NEV sales.At the National Standing Committee meeting on May 5, implementation opinions on speeding up the construction of charging infrastructure and better supporting new energy vehicles to the countryside and rural revitalization were reviewed and approved. Since 2020, the Ministry of Industry and Information Technology and other ministries and departments have carried out activities for new energy vehicles to the countryside for three consecutive years. They have held 18 special events, touring exhibitions, and corporate events in third- and fourth-tier cities, counties and districts in some provinces to encourage enterprises participating in rural activities to develop more reliable, advanced and applicable models, and increase the promotion of promotions for the event. We expect that the introduction of this policy will be a continuation and upgrade of previous policies, which will drive a further increase in sales of new energy vehicles in third- and fourth-tier cities.
The increase in NEV sales in third- and fourth-tier cities is in line with the overall market, and the participating models are mainly mid-range and low-end models.Since 2020, NEV sales in third- and fourth-tier cities and below have maintained rapid growth. The growth rate is in line with the overall NEV market. Every year, more than 60 models participate in car trips to the countryside, and the sales volume of these models is basically consistent with the industry as a whole. Judging from the participating models, cost-effective NEV models of A0 and below are the main ones. With the further improvement of facilities such as charging stations and the introduction of cost-effective hybrid models, we believe that the prices of models participating in new energy vehicles going to the countryside are expected to gradually rise.
The sector has entered the expected recovery period, and autonomous and new energy vehicles are the focus of the transaction.Continue to recommend the three main lines, the main line with high prosperity and new energy, recommending the target of Duoli Technology, iCody, Ruihu Mold, Double Ring Drive, Xinquan Co., Ltd., Xusheng Group, Tuopu Group, etc.; the intelligent main line, recommending the target Desai Siwei, Bethel, Shangsheng Electronics, Xingyu Co., Ltd., Keboda, Huayang Group, Huayu Automobile, etc.; independent brand main line, recommending the target ideal car, Changan Automobile, Geely Automobile, Great Wall Motor, BYD, Chunfeng Power, Fuyao Glass, etc. JAC, etc.
Risk warning:The risk that the price war will increase further, and the risk that demand for terminals will fall short of expectations
Main text
1. Core logic
The sector has entered the expected recovery period, autonomous and new energy vehicles are the focus of transactions, and beta opportunities are gradually arriving.Continue to recommend the three main lines, the main line with high prosperity and new energy, recommending the target of Duoli Technology, iCody, Ruihu Mold, Double Ring Drive, Xinquan Co., Ltd., Xusheng Group, Tuopu Group, etc.; the intelligent main line, recommending the target Desai Siwei, Bethel, Shangsheng Electronics, Xingyu Co., Ltd., Keboda, Huayang Group, Huayu Automobile, etc.; independent brand main line, recommending the target ideal car, Changan Automobile, Geely Automobile, Great Wall Motor, BYD, Chunfeng Power, Fuyao Glass, etc. JAC, etc.
2. A review of cars going to the countryside in 2009: WeChat and light goods vehicles have clearly benefited
In terms of funding sources, the central government bears 80%, and local governments bear 20%.The subsidy for cars going to the countryside uses the method of direct financial support. The state allocates 5 billion yuan, and the maximum subsidy limit is 5,000 yuan/vehicle. The central government bears 80% of the subsidy funds, and local governments bear 20%. (Note: The central government of the five ethnic minority autonomous regions and the regions hardest hit by the Wenchuan earthquake bears 100%).
Car purchase subsidies are strong, and the beneficiaries are broad.The subsidy amount is over 10%, covering many models of automobiles, motorcycles, and tricycles. Rural households can enjoy them, and there are no restrictions on the total amount and place of origin of the products. Specific method:
(1) Purchase or exchange of a minibus/minivan/light goods vehicle, with a subsidy of 10% of the sales price. If the unit price is 50,000 yuan or more, there is a fixed subsidy of 5,000 yuan for each vehicle.
(2) Purchase/exchange of motorcycles, with a subsidy of 13% of the selling price. If the unit price is 5,000 yuan or more, the fixed subsidy for each vehicle is 650 yuan.
(3) A fixed subsidy of 2,000 yuan for each scrapped three-wheeled vehicle and a fixed subsidy of 3,000 yuan for each scrapped low-speed truck.
The car trip to the countryside continued for a long time, almost two years after the postponement.The first phase was implemented from March 1, 2009 to December 31, 2010. At the beginning of 2010, the implementation of the “Cars to the Countryside” policy was extended by one year until December 31, 2010.
The automobile to the countryside has had a good stimulus effect, and sales of WeChat and light goods vehicles have increased significantly.Before the implementation of the automobile to the countryside policy: WeChat and light goods vehicles experienced negative year-on-year growth in several months before March 2009. During the implementation period: WeChat's sales achieved positive growth in 21 months, with an average monthly sales volume of 185,000 units, an average year-on-year growth rate of 58.5%. Of these, 6 single months increased more than 100% year-on-year. In 2012, after the implementation period ended, WeChat's average monthly sales fell slightly to 178,000 units. During the policy implementation period, light goods sales maintained positive growth, with an average monthly sales volume of 141,000 units, with an average year-on-year growth rate of 38.8%. Of these, 3 single months increased more than 100% year-on-year. After the implementation period ended, the average monthly sales volume of light goods remained at 14.6/145/151,000 units, respectively.
3. Review of new energy vehicles going to the countryside in 2020-2022
3.1. Four departments organize new energy vehicles to go to the countryside, and the government and enterprises cooperate with online and offline efforts at the same time
Since 2020, more than three years have passed since 2020, the number of departments responsible for new energy vehicles has been increased to four.As for cars going to the countryside, China proposed it in the 2009 “Automobile Industry Adjustment and Revitalization Plan”, but it mainly targets fuel vehicles. With the rapid development of new energy vehicles in China, in order to promote the promotion and application of new energy vehicles in rural areas and guide the upgrading of rural residents' travel methods, the Ministry of Industry and Information Technology announced the “Notice of the Three Departments on Launching New Energy Vehicles to the Countryside Activities” on July 15, 2020, marking that China's new energy vehicles have also begun to deploy activities to the countryside. Furthermore, at first, the New Energy to the Countryside campaign was mainly organized and carried out jointly by the Ministry of Industry and Information Technology, the Ministry of Agriculture and Rural Affairs, and the Ministry of Commerce, while the National Energy Administration began participating in NEV activities in 2021.
In terms of the form of going to the countryside, going to the countryside activities are mainly carried out through tours and test drive experiences in third- and fourth-tier cities. Since 2021, online channels have been gradually expanded. 1)Offline form: Compared with Tier 1 and 2 cities, Tier 3 and 4 cities are closer to county and rural markets and rural consumers. Therefore, NEV rural activities are often deeply integrated with local auto shows and other exhibitions in third- and fourth-tier cities, thus attracting traffic and increasing the popularity of various car companies, so that rural consumers can experience NEV products more closely. Since 2020, the Go to the Countryside campaign has held 18 launch events in 10 provinces (cities) across the country, including 16 cities in Shandong, Jiangsu and other provinces and cities. 2)Online format: Starting in 2021, the New Energy Vehicle to the Countryside campaign began to take the form of a combination of offline and online. For example, rural models actively participated in the “Double Product Online Shopping Festival” and various online promotional activities organized spontaneously by various platforms.
On the side of the main actors going to the countryside, the NEV to the countryside activities require the joint efforts of enterprises and the government.On the government side, after the central government submits a macro-level notice for new energy to the countryside, local governments need to introduce corresponding rural subsidy policies to support them. It also requires the cooperation of various OEMs, such as developing more reliable, advanced and applicable models, and issuing preferential measures.
In terms of the role of going to the countryside, with the cooperation of the two major actors of government and enterprise, new energy going to the countryside has achieved good results in correcting rural consumers' perceptions, enriching products for specific scenarios, and improving infrastructure.
1) Correcting rural consumer perceptions:New energy vehicles going to the countryside have corrected some rural consumers' misconceptions about electric vehicles. Before going to the countryside, some rural consumers had misunderstandings about batteries, maintenance, and driving experience of new energy vehicles due to problems such as insufficient consumer market education and insufficient charging stations in rural areas. However, through initiatives such as holding exhibitions and providing test drive services, the Go to the Countryside event corrected these misconceptions to a certain extent and laid the foundation for the popularization of new energy vehicles in rural areas.
2) Enrich products for specific scenarios:New energy activities to rural areas have raised the automobile industry's attention to third- and fourth-tier cities and rural markets, so OEMs have also begun to continuously increase products corresponding to scenarios to increase rural consumer choices.
3) Improve infrastructure:On May 5, 2023, the executive meeting of the State Council deliberated and pointed out that the construction of charging infrastructure should be speeded up to better support new energy vehicles going to the countryside and rural revitalization; at the same time, new energy vehicles going to the countryside can also reverse the solution of charging infrastructure problems in some rural regions.
3.2. There is great potential for the new energy market to go to the countryside, and the results of speeding up new energy in the corresponding region are obvious
The number of new energy models going to the countryside is gradually increasing, mainly covering A00, A0 and A classes.With the strengthening of policies for new energy vehicles to the countryside and the increase in the participation of car companies, the number of corresponding models has increased markedly. For example, only 16 participating models were announced in July 2020, but the models announced in May 2022 reached around 70. On the other hand, the models in the early days of new energy going to the countryside were mainly A00 class models such as the Baojun E100 and Hongguang mini EV, while the models participating in 2022 included high-quality A-class cars such as AION S and Song Plus.
Third- and fourth-tier cities are leading the way in developing new energy, and the proportion of pure electricity and plug-in hybrid sales has increased markedly in counties and villages.The rural activities have led to the rapid development of new energy vehicles in the region: according to data from the China Automobile Association, sales growth rates of new energy models participating in rural activities were 80%, 169%, and 87% respectively. With the exception of 2022, which was slightly lower, all other years were higher than the overall NEV sales growth rate. Furthermore, through regional market analysis of new energy passenger vehicles, it can be seen that the share of pure electric and plug-in hybrid vehicles in mega-cities showed a downward trend, while the share in counties and rural areas increased in reverse.
Editor/jayden