GF SEC: Demand for passenger cars remains promising with the dual drive of domestic growth and overseas expansion.

GF SEC released a research report stating that since 2021, the resilience of domestic demand combined with continuous export breakthroughs has been driving the continuous increase in demand for passenger vehicles in China. In terms of medium to long-term domestic demand, the focus is mainly on the structure of passenger vehicle demand, and the replacement demand is expected to become a new driver of growth in total domestic demand for passenger vehicles at a certain stage. From the perspective of the structure of passenger vehicle ownership, passenger vehicles have entered a new stage where replacement/scrappage can drive sales, and demand-side passenger vehicle sales are easy to rise and difficult to fall. With the acceleration of replacement demand release, sales may move up to a new level, welcoming a new opportunity. On the overseas front, the export outlook for passenger vehicles has remained favorable for 24 years, with the combination of "new categories" and cost-effectiveness driving up the market share of Chinese brands overseas. Looking ahead, the team believes that the demand under the dual drive of "domestic demand growth" and "overseas expansion" is still worth anticipating. 1. Domestic Demand: The stimulus of the policy to replace old vehicles with new vehicles has exceeded expectations, and the domestic market still has room for growth in the medium to long term. In the short term, GF SEC mainly focuses on the sales performance after the intensified policy of replacing old vehicles with new vehicles. The sales performance of passenger vehicles at the terminal has exceeded expectations after the policy was intensified, and the business climate continues to improve. According to the National Development and Reform Commission's "Several Measures to Provide Greater Support for Large-scale Equipment Renewal and Consumer Goods Replacement with Old Ones," starting from July 25, 2024, the subsidy standards for scrapping and renewal of vehicles will be raised. According to compulsory insurance, in August 2024, the sales of domestic passenger compulsory insurance (excluding imports, the same below) were 1.913 million vehicles, an increase of 2.2% year-on-year and 8.1% month-on-month. Under the high base in the same period, the demand performance in August exceeded expectations, and the effect of the policy of replacing old vehicles with new ones was significant. In terms of cumulative sales, from January to August 2024, the cum...