Foresight expects that under the influence of this updated subsidy (valid until December 31), the performance of mainland auto manufacturers in the fourth quarter will benefit from the demand that will be released ahead of schedule in early 2025.
Citigroup released a research report stating that BYD Company (01211), Leapmotor (09863), Great Wall Motor (02333) and Geely Auto (00175) are expected to benefit the most from this updated subsidy due to their high sales growth potential and rich product lines of plug-in hybrid vehicles and extended-range electric vehicles.
The report states that the subsidy amount of the car replacement policy launched in April has been raised. Among them, the subsidy standard for new energy passenger vehicles has been increased from RMB 0.01 million to RMB 0.02 million; the subsidy standard for purchasing passenger vehicles with a displacement of 2.0 liters and below has been increased to RMB 0.015 million. The bank expects that under the influence of this updated subsidy (valid until December 31), the performance of mainland auto manufacturers in the fourth quarter will benefit from the demand that will be released ahead of schedule in early 2025. Overall, the bank believes that this incentive policy will be conducive to the destocking of internal combustion engine vehicles and relatively quickly increase the penetration rate of plug-in hybrid vehicles and extended-range electric vehicles in the fourth quarter.