<News alert> Auto policies to stimulate vehicle sales
- Ten measures announced to promote vehicle sales, including auto financing and electrification of public fleet and vehicle replacement
- Measures also aim to lower the EV cost, including development of affordable models, lowering electricity tariff rates and increasing EV charging network coverage
- Reiteration by Chinese government to support the NEV market. Maintaining our 2023 NEV sales growth forecast of 30%
- Expect mild impact on sales in the near-term as concerns of the overall macro environment takes centre stage. We prefer BYD (1211 HK; TP HK$395) and Geely (175 HK; TP HK$16.8)
Measures largely to encourage NEV sector. The Chinese Government released some measures to promote auto consumption. Among the ten measures mentioned (broad direction unchanged from previous stimulus), four were NEV-related, as NEV is a major growth driver. Electrification of public fleet (transport and hailing services companies), expansion of charging infrastructure, connected vehicle testing zones to encourage intelligent vehicle market development, and lowering of EV cost (including affordable models, lowering electricity charging rates etc.) and vehicle replacement with electric version are measures to drive NEV sales.
Expect mild policy impact as concerns of weak macro environment takes centre stage. While the measures aim to support vehicle sales sentiment, we believe the near-term impact is likely to be mild. Earlier, the government has also extended NEV purchase tax waiver till end 2027. Besides, some of the measures such as the refinement of the vehicle sales quota system have been implemented before. Hence, we are maintaining our 2023 NEV sales growth forecast of 30% to about 9m units. In 1H23, NEV sales rose 44% yoy to 3.7m units. We prefer BYD (1211 HK; TP HK$395) and Geely (175 HK; TP HK$16.8)