Incident: On August 1, the company released the July 2024 production and sales report. The total production of new energy vehicles was 320,852 units, up 17.78% year on year and 6.09% month on month. Total sales of new energy vehicles were 342,383 units, up 30.60% year on year and 0.21% month on month. Among them, the total production of passenger cars was 319,268 units, and the total sales volume was 340,799 units; the total production of commercial vehicles was 1,584 units, and the total sales volume was 1,584 units.
July sales were still at an all-time high, with sales of over 0.3 million for the month of consecutive months. From the company's perspective, BYD's total sales volume of new energy vehicles reached a new high in July 2024, up 0.21% month-on-month. Compared with the previous month's increase, the year-on-year increase was 30.60%. The year-on-year growth rate has shown a downward trend since April 2024. BYD has sold more than 0.3 million vehicles for 5 consecutive months this year, and is still at the top of the NEV sales list. In the first seven months, BYD sold 1,955,366 NEVs, with cumulative sales of 1,947,944 passenger cars. On July 4, 2024, BYD held the launch ceremony for the 8th million NEV in Thailand, making it the first car company in the world to reach this level. In the first six months of 2024, BYD sold 1.394 million vehicles, ranking eighth among global car brands.
From an industry perspective, the China Automobile Dealers Association announced that the China Auto Dealers Inventory Warning Index for July 2024 was 59.4%, up 1.6 percentage points year on year and 2.9 percentage points from month to month. It is above the boom and dry line, and the automobile distribution industry is in a sluggish range. The car market did not perform well in July due to the early release of some demand due to promotions in June and extreme weather in some regions and high temperature vacations by manufacturers in July. However, the summer tourism boom and the “Certain Measures on Strengthening Support for Large-scale Equipment Renewal and Consumer Goods Trade-In” issued by the National Development and Reform Commission and the Ministry of Finance on July 25 boosted NEV sales, and the overall performance of the July car market was stable under hedging.
Passenger car sales increased slightly month-on-month, with strong performance in the segment below 0.2 million, with DM 5.0 driving growth. In July 2024, BYD's total passenger car sales volume was 340,799 units, up 30.52% year on year, up 0.17% month on month. Among them, Dynasty Network/Ocean Net is still the main sales force, accounting for 50.74%/44.38% of total passenger car sales, up 30.17%/30.45% year on year, which is basically in line with the year-on-year growth rate of passenger cars.
(1) Dynasty Network: In July 2024, Dynasty Network sold a total of 172,930 vehicles, up 3.60% from the previous month.
Among them, the Qin sold 73,541 units, ranking first in the sales volume of Dynasty Network, with a month-on-month increase of 7.44% and a year-on-month increase of 64.54%. The Qin L DM-i, which applied fifth-generation DM technology, continued to sell 32,941 units, accounting for 44.79% of the total sales volume of the Qin series, and the market performance was good; Yuan/Song sold 40,952/28,328 units, up 13.06%/14.88% month-on-month; Han/Tang sales volume fell 17.44% month-on-month %/ 23.30%
(2) Ocean Net: In July 2024, Ocean Net's total sales volume was 152,767 units, a decrease of 3.26% over the previous month.
Among them, Song PLUS/Seagull sold 36,947/36,256 units per month, with a slight gap of 18.91%/0.53%; Seal sold 33,595 units, up 37.64% month-on-month, ranking third; the SEAL 06DM-i, which applied fifth-generation DM technology, sold 25,200 units per month, up 80% month-on-month, with significant volume; Destroyer 05 sold 25,558 units per month, down 22.50% month-on-month, ranking fourth; Dolphin/Sea Lion sold 12,993/ 300 units in July 7 Vehicles, up 14.17%/0.82% month-on-month, ranking fifth/sixth; the e2 Honor Edition/Frigate sold 689/316 units in July, up 18.79%/39.11% month-on-month, ranking seventh/eighth.
(3) Tension: In July 2024, Tension sold 10,340 units, down 15.76% month-on-month and 7.23% year-on-year. 87.33% of the brand's sales volume was contributed by Tension D9. D9 sold 9,030 units a month, down 11.35% year-on-year. Tense N7 sold only 1,310 units this month, a decrease of 37.29% over the previous month. Tensei N8 hasn't been sold for two consecutive months. Tension's weakness reflects BYD's weak dominance in the market above 0.2 million. On August 2, 2024, Zhao Changjiang, general manager of Tension, displayed the exterior design of the new N7 movie hunting version in response to consumer demand on Weibo, which is expected to improve the poor performance of the N7.
(4) Looking Back and Equation: In July 2024, Looking Up U sold 439 units per month, up 5.02% month-on-month, which is fair for a million-class SUV. The Equation Panbao sold 1,842 vehicles in May, down 31.27% from the previous month. It has sold less than 3,000 units in March. On July 29, the model officially announced a 0.05 million price reduction, entering the 0.2398-0.3028 million price range, which is expected to boost sales. Fangchengbao's foreign investment promotion is progressing in an orderly manner. Xiong Tianbo, general manager of Fangchengbao Auto, said at a media conference that about 60% of the top 100 dealer groups have expressed their intention, and at the same time, more than 100 leading dealer investors from more than 100 provinces and cities have submitted applications. Luxury and joint venture dealers are the absolute main force in the application.
Overseas markets are arranged from multiple angles, and the prospects for going overseas are positive. In July 2024, the company exported 30,014 vehicles, up 11.18% month-on-month and 65.19% year-on-year, accounting for 8.77% of total sales in July.
(1) Overseas production capacity: On July 4, 2024, BYD held a Thai factory completion and launch ceremony for the 8th million new energy vehicles in Rayong Province, Thailand. The annual production capacity is about 0.15 million vehicles, including four major process and parts factories, which are expected to further boost BYD's sales performance in Thailand and Southeast Asia; on the evening of July 9, the Turkish Embassy in Beijing announced that BYD has signed an agreement with the Turkish Ministry of Industry and Technology to invest 1 billion US dollars to build a new automobile factory and R&D center in Turkey with annual production capacity 0.15 million, which is expected to be put into operation in 2026. The construction of the plant will help BYD avoid additional tariffs in Turkey and is expected to open up the European market.
(2) Model release: BYD launched new models in Brazil, Ecuador, Senegal and Indonesia in July to continuously enrich the overseas product matrix or help export sales grow steadily.
(3) Channel cooperation: On July 2, BYD signed a memorandum of understanding on strategic cooperation with international sustainable travel service company Ayvens. Ayvens' European customers will enjoy tailor-made electric fleet solutions, covering consulting services, operation and leasing, and is expected to serve more than 30 companies within the first year; on July 23, local time, BYD received an order for 120 electric buses from the well-known South African bus operator Golden Arrow to establish the first electric bus fleet in South Africa; on July 31, BYD and Uber officially announced The strategic cooperation includes launching 0.1 million BYD new energy vehicles on the Uber platform in major global markets and collaborating to develop BYD autonomous vehicles to be deployed on the Uber platform in the future. The partnership will begin in Europe and Latin America, and gradually expand to regions such as the Middle East, Australia, and New Zealand. On the channel side, BYD cooperates with highly influential overseas travel companies to target their mature customers and markets and lower the entry threshold for overseas markets. Meanwhile, the autonomous driving partnership with Uber further complements its smart driving deployment. BYD has now been selected as one of the first car companies on the pilot list for intelligent connected vehicle entry and road traffic in China. It has a R&D team of over 4,000 engineers. Last year, it launched the world's advanced safety-centered intelligent driving assistance system “Tenjin Eye”, and has successively mass-produced and delivered models such as the Tensei N7, the U8, Han, and Sea Lion 07EV, etc., and has invested heavily in the field of intelligent driving. It has cooperated with Uber for smart driving or to deal with Tesla's Robotaxi business.
The Shuang Song model was released in July, and high-end centralized sales were launched in the second half of the year. On July 25, 2024, BYD held a launch conference for the Song L DM-i and Song PLUS DM-i. The official guide price was 0.1358-0.1758 million yuan, using fifth-generation DM technology, focusing on low energy fuel consumption, 3.9 L fuel loss in 100 km, and a comprehensive battery life of 1500 km when fully charged. Song PLUS DM-i is the world's first wide-body ultra-hybrid SUV. The Song L DM-i is a mid-class SUV. The Qin L DM-i/Seal 06 DM-i sold 32,941/25,200 units in July. The Qin L DM-i accounted for 44.79% of the total sales volume of the most popular series in Dynasty Network. Seal 06DM-i had a high month-on-month growth rate (80% this month). It can be seen that the DM5.0 technology is more popular in the market, and the Shuangsong market performance can be expected, or further drive overall sales.
In the second half of the year, the company expects to launch high-end models such as the U7, Tense Z9GT, and Equation Panbao 8, which is expected to continue to optimize the product structure and drive profits upward.
Investment advice: As an industry leader, the company has a strong dominance in the NEV field below 0.2 million and continues to maintain technological leadership. In the second half of the year, the company concentrated on enriching high-end models, and continuously optimized its product matrix. At the same time, the company actively deployed overseas markets and hot fields such as autonomous driving. Even if competition in the NEV industry intensifies, the company can still face it calmly based on its long-term technology accumulation and production and operation capabilities. We predict that the company's net profit for 2024-2026 will be 37.46 billion yuan, 45.1 billion yuan, and 54.86 billion yuan, respectively, corresponding to PE of 20 times, 17 times, and 14 times, respectively, maintaining the “increase” rating.
Risk warning: Competition on NEV tracks is fierce, new products are being launched less than expected, geopolitical risks, macroeconomic changes.