Long-awaited surge! Automobile parts and vehicle sectors in full swing with a year-on-year increase in automobile production and sales in January

The automobile parts sector hit a low of 20379.29 on February 6th, the lowest since May 2022, before rebounding overall and recording four consecutive increases from February 8th to February 21st. On the morning of February 21st, the automobile parts index surged by over 4% with unstoppable momentum.

In terms of individual stocks, Huayang Transmission rose by 29.91%, and stocks such as Xingyuan Zhuomei, Mingyang Technology, and Tongxin Transmission rose by over 10%. Weide shares, Zhejiang Li Ming, Heli Technology, and Deshengli, among nearly 9 stocks, hit the daily limit.

The new energy vehicle sector also rose, with the index increasing by over 3% during the day. On an individual stock basis, Yuxin Electronics hit the daily limit, and shares such as Shenglong Shares and Yaxing Coaches led a surge of daily limits.

The China Association of Automobile Manufacturers released the domestic automobile production and sales situation in January 2024, stating that in January 2024, automobile production and sales reached 2.41 million and 2.439 million, a decrease of 21.7% and 22.7% compared to the previous month, and an increase of 51.2% and 47.9% year-on-year, respectively. In terms of new energy vehicles, production and sales of new energy vehicles in January showed a rapid year-on-year increase, with a market share of 29.9%. Specifically, in January, the production and sales of new energy vehicles reached 787,000 and 729,000, a decrease of 32.9% and 38.8% compared to the previous month, and an increase of 85.3% and 78.8% year-on-year, respectively. The China Association of Automobile Manufacturers commented that the approaching Chinese New Year holiday led to continued New Year promotions, releasing pent-up demand for car purchases before the festival. Combined with the low base affected by the transition of the Chinese New Year month and promotion policies in the same period last year, automobile production and sales in January showed significant growth year-on-year.

As the automobile parts rose, the automobile vehicle sector quickly followed suit, with the index rising by over 4% at one point. In terms of individual stocks, Zhongtong Coach and Yaxing Coach hit the daily limit, and stocks such as Dongfeng Motor, Haima Motor, Jianghuai Motor, and Beiqi Blue Valley followed suit.

According to data released by the China Association of Automobile Manufacturers, the production and sales of commercial vehicles showed a rapid year-on-year increase in January 2024, both exceeding 60%. Specifically, in January, the production and sales of commercial vehicles reached 327,000 and 324,000, a decrease of 10.7% and 11.1% compared to the previous month, and an increase of 66.2% and 79.6% year-on-year, respectively. As for passenger vehicles, the China Association of Automobile Manufacturers stated that with the combined factors of pre-holiday car purchase demand and low base in the same period, sales of passenger vehicles experienced rapid year-on-year growth. In January, the production and sales of passenger vehicles reached 2.083 million and 2.115 million, a decrease of 23.2% and 24.2% compared to the previous month, and an increase of 49.1% and 44% year-on-year, respectively.

Guotai Junan released a research report evaluating the performance of the passenger vehicle sector, stating that since 2024, the passenger vehicle sector has shown significant adjustments due to risk aversion and trading structure impact. With the increase in market risk appetite, the advantages of the sector's performance certainty will be highlighted, and the sector is expected to enter a period of expected recovery. The short-term market opportunities mainly lie in two directions: entities with high growth in 2023 performance and good performance expectations in the first quarter of 2024, as well as sub-industries with marginal changes in the race, such as the Xiaomi industry chain and the intelligent driving industry chain driven by AI. In 2024, the passenger vehicle market will continue to accelerate the domestic replacement, the upgrade of independent brands, and the continued expansion of overseas markets, with a clear logic of both quantity and price rising. The pre-Chinese New Year promotions of new energy and fuel brands since December 2023 have caused disruptions in sales structure, and it is expected that from March onwards, the sales structure of passenger vehicles will gradually return to normal. At the same time, with a relatively low base, the performance of component companies in the first quarter of 2024 is expected to continue to show high year-on-year growth. It is worth mentioning that since the Chinese New Year holiday, many car companies have successively started price reduction mode, and the price war in the car industry continues to be fierce. Cui Dongshu, Secretary-General of the China Association of Automobile Manufacturers, mentioned on February 19th that the sales of new energy passenger cars in the country reached 8.88 million in 2023, exceeding the overall sales volume of the national passenger car market in 2009. In the coming years of rapid growth, 2024 is a critical year for new energy car companies to establish themselves, and competition is expected to be intense.

Regarding the new energy vehicle sector, a Dongguan Securities research report stated that the gradual return of the new energy vehicle market is expected to be driven by the price reduction and promotions initiated by car companies. With the decline in battery costs, continuous supply richness, and the accelerated application of new technologies such as fast charging and intelligent driving, the sales of new energy vehicles are expected to maintain rapid growth throughout the year. In terms of the industrial chain, it is currently in a destocking phase, with many companies reducing or suspending production during the Spring Festival period, and with the overall stability of prices in the post-holiday industrial chain, waiting for downstream demand to recover. The current valuation of the new energy vehicle industry is at a low point, and it is recommended to focus on the mid-to-downstream sectors that benefit from profit reconstruction of the industry chain, top companies with high-quality production capacity in the material sector, and demand-driven increments in the battery technology iteration. On February 21st, the battery sector also rose along with a strong performance in the market and the automobile sector, with the battery index rising by 4.43% by mid-day closing. In terms of individual stocks, Lingpai Technology, Wanli Co., Ltd., and Time Eternal, among others, hit the daily limit, and companies such as Zhongyin Rongye, Wild Horse Battery, and Fangyuan Shares followed suit.