Hong Kong-listed auto stocks strengthened, catalyzed by the auto show. Policy support boosted the continuous rebound in the auto market's prosperity.

Hong Kong-listed auto stocks were generally active and strengthened yesterday. With the Shanghai Auto Show set to open this week, coupled with double-digit growth in production and sales in the auto industry in Q1, the sector is expected to see short-term catalysts.

As of press time, the three new automakers, Leap Motor (09863.HK), Li Auto-W (02015.HK), and NIO-SW (09866.HK), all rose by more than 3%, while established automakers such as BYD (01211.HK) and GAC Group (02238.HK) also followed suit.

On the news front, the 21st Shanghai International Automobile Industry Exhibition will open on April 23.

Kaiyuan Securities pointed out in a report on April 21 that this year's auto show has invited nearly 1,000 well-known companies from 26 countries and regions. Among the leading domestic companies, BYD, Changan, Great Wall, and Geely are rapidly advancing their intelligent strategies, with the trends of intelligence, electrification, and localization deeply unfolding.

In addition, the strong production and sales of domestic NEVs in Q1 have driven a strong start to the auto market, raising expectations for the upcoming quarterly reports of automakers.

According to data released by CAAM, in Q1, China's NEV production and sales reached 3.182 million and 3.075 million units, up 50.4% and 47.1% YoY, respectively. Vehicle exports continued to grow, with overseas influence steadily increasing, including NEV exports of 441,000 units, up 43.9% YoY.

According to Guotai Junan International's tracking data, benefiting from the government's "program of large-scale equipment upgrades and consumer goods trade-ins," wholesale and production of passenger vehicles in March both hit record highs for the same period, further boosting market sentiment.

Data shows that the auto inventory warning index in March was 54.6, the lowest level in seven years, with both retail and wholesale volumes seeing significant growth.

Meanwhile, NEV export sales in March reached 143,000 units, up 6.4% YoY and 21.2% MoM. Guotai Junan International stated that the end-use market for NEVs in emerging markets continues to recover, and export sales are expected to further increase.

On the other hand, as a major driver of domestic demand, auto consumption continues to receive policy support.

The Ministry of Finance issued a notice on April 21, allocating over 13.5 billion yuan for the first batch of energy conservation and emission reduction subsidy funds in 2025. The funds are specifically used for the settlement of NEV promotion and application subsidies for 2022 and previous years, as well as the advance allocation of NEV promotion subsidies for 2022.

China Securities also stated in a recent report that achieving significant consumption growth this year is both an inevitable choice to counter external shocks and a key driver for stabilizing the economic foundation, and domestic consumption expansion policies are likely to continue to be strengthened.

It is worth noting that, according to Huaxin Securities' research, the auto market has been recovering recently, with domestic brands gaining significant increments in the NEV and export markets. From January to March, the retail market share of domestic brands was 63%, up 7.9 percentage points YoY.

In terms of individual stocks, leading traditional automakers have performed excellently in their transformation and upgrading, with brands such as BYD, Geely, Chery, and Changan seeing notable increases in market share.