According to the 21st Century Business Herald APP, Zhongjin released research reports stating that since 2022, the export volume of passenger vehicles has continued to increase, with more and more car companies deepening their overseas market layout. The vast global market space and good structure create opportunities, while car companies also face complex and changing external environmental challenges. 2024-2026 is an important strategic moment for Chinese car companies to go global in all aspects, and it is more important to closely track changes in the external environment and car enterprise strategies.

Challenges: Increasing trade policy risks, multiple regions tightening import duties and taxes on passenger vehicles. The process of Chinese car companies going global has not been smooth sailing. This year, frequent additional duties, anti-subsidy sanctions, and other measures have been implemented. How to deal with policy risks has become increasingly important. For example, the EU plans to impose anti-subsidy taxes on imported pure electric vehicle models from China, with the lowest increment being 17%; Brazil plans to gradually increase the import tariffs on new energy vehicles starting on January 1, 2024, with a final goal of 35%.

Outlook: Capacity going abroad + joint ventures and partnerships to address trade risks, relying on new energy advantages, adapting to local conditions to leverage greater incremental demand. Strategically, going abroad with capacity or weakening the impact of unfavorable trade policies is an inevitable choice. Local factory construction, light asset outsourcing, joint ventures and partnerships are worth considering. Tactically, fuel vehicles as the foundation, new energy has greater potential. Actively exploring market opportunities in Southeast Asia, Latin America, considering oil-electric price differentials, market environment, consumer preferences, and adaptively leveraging hybrid advantages.

From high growth to stable growth, car companies face greater differentiation, with long-term space and profits still worth looking forward to. According to CPCA, in 1H24, the narrow definition of passenger car exports reached 2.186 million units, a year-on-year increase of 30.3%, with a booming vehicle export market and a more balanced market structure. Due to policy changes and the high base effect, it is expected that the growth rate will slow down in 2H24, with the total export volume maintaining a 25% growth for the year. Looking ahead, policy negotiations and localization construction will still take time. It is expected that the export growth rate may fall, and the performance of car companies will be more diverse. In the long term, Chinese brand overseas sales are expected to reach nearly 8 million units, with new energy accounting for over 50%. Market supply and demand determine pricing, operational efficiency determines costs. Compared to the domestic market, better profitability is expected to be maintained overseas.

Recommend focusing on traditional leading independent brands with relatively sustainable growth in overseas sales, high proportion of total sales, significant profit contribution, and lower valuation, such as Great Wall Motor (02333), Geely Auto (00175), Chongqing Changan Automobile (000625.SZ), etc.; Head new energy car companies with globally competitive technologies and products, large growth space in overseas sales, and relatively complete overseas localization layout, such as BYD (002594.SZ,01211), Leapmotor (09863), Chongqing Sokon Industry Group Stock(601127.SH), Xpeng (09868), Nio Inc -SW (09866), etc.

Risk factors: Overseas market policy risks; overseas operational risks; overseas new energy transformation falling short of expectations.