Cinda: optimistic about the continued high prosperity of the automotive industry at the end of the year, sales growth is expected to further increase.

Cinda released a research report stating that before the end of the current round of the old-for-new policy, combined with the peak season for car consumption at the end of the year, the supply of new cars from various car companies in the second half of the year has increased. It is optimistic that the high prosperity of the automotive industry at the end of the year will continue, and the growth rate of car sales is expected to further bring excess returns to the automotive sector. At the same time, approaching the end of the year, the market may speculate on the policy expectations for 2025 in advance. It is expected that if the old-for-new policy continues or other new policies are introduced, it will provide better support for car consumption in 2025, and the excess return may continue; but if there is no relevant stimulus policy, car sales at the beginning of 2025 may come under pressure, then it is possible to look for incremental directions around four key logics (domestic substitution trend, penetration rate improvement track, globalization development, exploration of new business models) and layout structural opportunities. The old-for-new policy promotes the replenishment demand during the peak season of "Golden September and Silver October". In October, batch and retail sales of passenger cars saw a relatively high growth compared to the same period last year. In October, the penetration rates of new energy vehicles reached 50.1% and 52.9% for wholesale and retail respectively. Looking ahead to November 2024, with the promotion of national policies to boost consumption, scrap renewal and subsidies for the old-for-new policy, coupled with the recent stock market rise driving household asset balance sheet repairs, the car market is expected to maintain strong growth in November. In terms of individual stocks, focus on companies with high performance and growth certainty, continuous strengthening of competitive advantages, and continuous improvement of competitive landscape in niche sectors. For the auto sector, look for leading car companies benefiting from improved competitive landscape and continuous strengthening of the new car cycle, focusing on BYD Company Limited + Huawei-aligned car companies such as BYD Company Limited, Anhui Jianghuai Automobile Group Corp.,Ltd., Chongqing Sokon Industry Group Stock, Chongqing Changan Automobile, as well as Hong Kong-listed companies Xiaopeng Motors, NIO, and others. In the parts sector, focus on three key directions: single-product leaders with stable market share and significant competitive advantages, companies expanding into multiple product categories with platform advantages, and high-quality parts with undervalued stocks such as Fuyao Glass Industry Group, Changzhou Xingyu Automotive Lighting Systems, Bethel Automotive Safety Systems, etc. Risk factors: macroeconomic fluctuations, car sales lower than expected, fluctuations in raw material prices, etc.