Recent developments in the industry

The 2020 Beijing International Auto Show officially opened on September 26. We attended the live press conferences of many car companies and experienced their products up close.

reviews

As the rise of independence progresses, it enters the harvest stage.The rise of independence has left the deepest impression on us at this auto show. We have observed that the gap between leading independent brands and joint venture brands has further narrowed, mainly reflected in the following aspects: 1) The sense of interior and exterior design has been significantly enhanced, and an independent lineage has been formed to get rid of the traces of shambles. 2) The development capacity and product strength of the traditional “three components” (engine, gearbox, and chassis) have been further improved, and the new energy three-power system will not fall behind. 3) The materials used are solid. We think the reason behind this is the reduction in costs brought about by the growing maturity of the domestic supply chain. 4) Quality control improvements. We believe that the strict quality management system introduced by the joint venture brand is reflected in the gradual establishment of autonomous car companies. 5) Marketing concepts and methods have been upgraded, and brand promotion has become the focus of attention of various car companies. At the same time, we have observed that based on China's world-leading Internet ecosystem and the more flexible development concepts of autonomous car companies, leading independent brands have surpassed joint venture brands in the connected car system. We believe that in the rapid development of the Chinese automobile industry in the past 20 years, autonomous car companies have moved from learning and following to positive development and exploration, but now they have entered a rewarding stage where they have achieved transcendence in some fields.

Brand differentiation, focus, and consumption upgrades are still major trends.Whether it's the list of exhibitors announced before the exhibition or the venue structure and atmosphere at the auto show site, we continue to feel the trend of brand differentiation and focus. International manufacturers that did not attend the exhibition include Renault and DS, while independent manufacturers include Baowo, Zotye, etc., as well as the new car builder Aichi. At the exhibition site, various brands were also divided. There were many new models from leading independent brands such as Great Wall (02333), BYD (01211), Changan, and Hongqi, which received a high level of attention. In contrast, Korean Hyundai Kia still received low on-site attention when new products were released; there was also little attention at the French booth. Among the joint venture brands, BBA has a large exhibition area and has received a high level of attention, and we believe that the trend of consumption upgrading will continue. The high-end strategies of autonomous car companies are also in progress. Great Wall Wey and Geely (00175) Necker have both set up independent platforms, showing a different tone from their parent brands. New independent high-end brands participating in the exhibition include BAIC Arcfox and Dongfeng (00489) and Rantu.

Electrification is progressing smoothly, and intelligence and configuration upgrades are progressing rapidly.Few new energy models were released at this auto show. The VW ID series was not exhibited on site, and traditional car companies' new energy models are still mainly oil to electricity. Meanwhile, the A0/A00 models are back in sight, including the Euler Cat, Baojun mini EV, etc. Vehicle intelligence is advancing rapidly, and the penetration rate of LCD instruments and large-screen car engines is rapidly increasing. Huawei also participated in the auto show for the first time, bringing solutions in the five areas of intelligent driving, smart cockpit, connectivity, electricity, and car cloud. Field workers said they could see mass-produced models on the market in 2021. At the same time, the application of canopy glass also exceeded expectations and was adopted by new models such as Geely Starry, Roewe ER6, and Polestar 2.

Valuation and advice

We think the car market continues to move in an upward cycle over a longer period of time. Structurally, leading autonomous car companies are showing strength. With the launch of competitive new products, market share and performance are expected to continue to rise. Among them, strong product cycles are recommendedChangan, Great Wall H. Consumption upgrades are also a long-term trend, so it is recommended to focus on leading luxury car dealers. In terms of components, we are optimistic about the alpha opportunities brought about by vehicle configuration upgrades, including those in the direction of intelligent vehicle connectivityAll wins, Huayu, and those benefiting from the increase in the value of bicycle glassFuyao (03606).

risks

Subsequent car sales fell short of expectations, and health incidents repeatedly affected car production and sales.

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Sorting out the important information of the 2020 Beijing Auto Show

SAIC Motor Group:MG released two new models, the MG 5 coupe, the MG's leading large SUV, third-generation design language, fuel technology design; Roewe opened pre-orders for the MPV model iMax 8, with a pre-sale price of 2088-2588,000 yuan; the new Baojun focuses on pure electric A00, which is very popular. Overall, the number of new models is limited, and all of their car companies have begun to explore opportunities for further market segmentation.

Guangzhou Automobile Group (02238):Launching the digital accelerator GDA project, the company aims to build an intelligent operation system for the entire value chain by building a big data platform and operation platform to achieve personalized marketing, intelligent large supply chains, coordinated product development, and transparent management and control, and become a leader in implementing digital business drives by Chinese car companies. Adhering to the ideas and direction of the GAC Group's e-time action plan, GAC Trumpchi officially unveiled the “Digital Trumpchi” transformation strategy at this auto show, clarifying the blueprint for future digital development, focusing on customer experience, and creating business innovation in the golden triangle of “customer-store-factory”.

In terms of new cars, the company has few updates. The Enpulse movie concept car was released; the new Trumpchi M8 was officially launched at a price of 1798-264,800 yuan.

Great Wall Motor:Releasing the Haval First Love as a replacement model for the H2, we think the positioning is more accurate and there is plenty of room for imagination in the marketing direction. The Euler brand released trendy - an American-style retro concept electric vehicle with a unique shape and continued to follow the interactive marketing route; the company announced that the third-generation H6 had orders for over 20,000 units, accounting for 70% of the high allocation, and sold over 10,000 units in August; the Tank 300 announced interior details, which received a high level of attention on the scene.

Changan Automobile:The auto show press conference focused on the Uni series. The company announced that the Uni series has planned 5 models in the future: fuel SUV+fuel sedan+plug-in hybrid SUV+pure electric SUV+pure electric sedan. The company said the second model in the Uni series will be launched soon next year. At the press conference, the company emphasized the creation of a social circle on Uni Planet, including consumer driving logs, magic neighborhoods, etc., to better target the post-90s youth group.

NIO Auto (NIO.US):NIO OS 2.7.0 was released, bringing new features such as Navigate on Pilot (NOP) pilot assistance. NIO is the second company in China to implement autonomous driving functions on expressways. It can use a high-precision map to automatically assist driving according to the navigation route under specified routes. At the same time, the company announced that the option rate of NIO Pilot autonomous driving assistance is as high as 50%, and the cumulative mileage exceeds 70 million kilometers.

In terms of energy supplementation services, the company has completed 950,000 power exchange services. The energy supplementation system has also been opened up. It has completed more than 400,000 one-click charging times for more than 30 brand car owners, and has set up more than 60 supercharging stations and more than 430 supercharging stations. 90% of the charging capacity comes from non-NIO brand cars. The subsequent company plans to develop the “Power Up” app and launch more than 30,000 DC charging stations for destinations.

BAIC Arcfox:The Arcfox αT, the first mass-produced model of the Arcfox brand owned by BAIC Blue Valley Magna, officially began pre-sale at the Beijing Motor Company, with a pre-sale price of 25-33 million yuan. The new car is divided into three versions: 480 km, 653 km, and a four-wheel drive performance version. It is equipped with a 20.3-inch widescreen screen, and is also equipped with L2 level driving assistance, face recognition, and four-screen connectivity.

Picture of Dongfeng Lan:The company plans to launch at least one new car every year starting in 2021, covering multiple market segments such as sedans, SUVs, and MPVs in 5 years. The i-Free will be the first large SUV. It is positioned as a medium to large high-end smart electric SUV with zero mileage anxiety. It is planned to be put into production next year. The front face will use Kunpeng's extended wing shape, penetrating wing headlights, and an atmospheric style.

FAW Hongqi:E-HS9 officially started pre-sale, with a pre-sale price of 55-750,000 yuan. Customized models such as the H9+ and HS7+ will be exhibited to further emphasize their luxury position.

Linker: Showcased SEA's vast architecture and the ZERO Concept concept car. Company introduction The vast architecture is divided into a hardware layer, a system layer, and an ecosystem layer. The hardware platform covers models with a wheelbase of 1800-3300 mm, with a maximum charge of 110 kWh. The performance version has a range of about 700 km and an electricity consumption of about 15 kWh/100 km. Linker plans to achieve “full” autonomous driving on structured roads on this architecture in 2022. The platform body is made of 30% aluminum, and the chassis is highly aluminized. The swing arm, steering joint, steering column, rear subframe, etc. are all made of cast aluminum or wrought aluminum. Equipped with an air suspension system, the supplier's more diversified steering system still uses a mechanical connection scheme. The braking system is wire-controlled and designed with double redundancy. ZERO Concept uses penetrating taillights, and the light set has family characteristics and is highly complex. The roof of the car uses integrated glass, and the amount of glass used throughout the car is high.

Fuel cell vehicles:We believe that commercialization of hydrogen fuel cell technology in passenger cars is still in its infancy. Japanese and South Korean manufacturers are exhibiting hydrogen fuel vehicles. At the auto show, Toyota exhibited the MRAI Concept, a fuel cell sedan intended for the Beijing Winter Olympics, and showed a diagram of its electric stack and energy flow. Hyundai exhibited its hydrogen fuel cell SUVNEXO, which was mass-produced and sold in Korea, Europe, and the US in 2018. Its on-board hydrogen storage form is high-pressure gaseous hydrogen storage with a battery life of about 800 km, and is scheduled to be sold domestically in 2021.