China Merchants Securities International released a report stating that according to the China Association of Automobile Manufacturers (CAAM) data, the wholesale sales of passenger vehicles in mainland China in August were 2.15 million units, a year-on-year decrease of 3.9% but a quarterly increase of 9.6%. Among them, independent brands continued to show strong growth, with a year-on-year increase of 12%, while mainstream joint venture car companies continued to struggle, with a year-on-year decrease of 30%. In the first eight months of this year, the industry's cumulative wholesale sales reached 15.94 million units, a year-on-year increase of 3.7%. Looking ahead to September, the industry's peak season, supply and demand are expected to continue to strengthen.

The bank stated that the increased subsidies drive the peak season effect, and economic electric vehicles with high flexibility are expected to benefit the most, including BYD (01211.HK) and Geely Auto (00175.HK). In addition, the A-level car market has a capacity of nearly 8 million units, but the penetration rate of new energy vehicles is relatively low. Following the success of BYD Yuan Plus, Geely's Galaxy E5 and Xpeng's Mona 03 and other new models have seen explosive sales. A-level pure electric vehicles now have the advantages of high cost performance and high intelligence, and are starting to gain a larger market share in the fuel vehicle market.

China Merchants Securities International mentioned that the policy incentives, combined with the peak season effect, have improved the economic conditions in the fourth quarter. They are bullish on companies like BYD and Geely that will benefit from the policy dividends and the resonance of the new car cycle. In addition, the success of Xpeng Mona's new model has increased the product cycle certainty, and the target price of the Xpeng Group has been revised from 36 yuan to 50 yuan.