BOCOM INTL: The scope of support for the auto industry's trade-in program is further expanding. This year's policies are expected to continue to strengthen.

BOCOM INTL released a research report stating that the updated replacement subsidy policy related to the automotive industry this time basically continues the subsidy policy from July 2024, but the subsidy support range has been further expanded. The bank believes that the subsidy range and intensity for passenger cars this year are expected to continue to increase, in order to further stimulate consumption. Subsequent stimulus policies may be expanded to include first-time buyers (60% of car purchases). High-quality targets in the passenger car/motorcycle sector include: BYD COMPANY (01211), LI AUTO-W (02015), NIO-SW (09866), XPENG-W (09868), YADEA (01585). Event: On January 8, 2025, the National Development and Reform Commission and the Ministry of Finance issued a notice on the "2025 Policy on Expansion of Large-Scale Equipment Upgrading and Trade-in for Consumer Goods," proposing to continue to allocate ultra-long-term special treasury funds directly to localities, and expand the support scope for scrapping and upgrading of vehicles. BOCOM INTL's main points are as follows: The scope of support for scrapping and upgrading vehicles is further expanded. The notice specifies that individual consumers who scrap gasoline passenger cars registered before June 30, 2012 (including that day), diesel and other fuel passenger cars registered before June 30, 2014, or new energy passenger cars registered before December 31, 2018, and purchase new energy passenger cars listed in the "Catalog of New Energy Vehicle Models Eligible for Vehicle Purchase Tax Exemption" or fuel passenger cars with a displacement of 2.0 liters or less, will receive a subsidy of 2,000 yuan for each new energy passenger car purchased, and 1,500 yuan for each fuel passenger car with a displacement of 2.0 liters or less. The subsidy amount is the same as before, but the scope of scrapping and upgrading has been expanded. Based on the "Notice on Further Improving the Work of Trading in Old Cars for New Cars," the bank estimates that this time the expansion of the scope of support for scrapping and upgrading vehicles is about 11 million vehicles. Improving the standards for subsidies for vehicle replacement and upgrading. For individual consumers who transfer ownership of their registered passenger cars and purchase a new car, support will be provided for vehicle replacement and upgrading, with a maximum subsidy of 15,000 yuan for each new energy passenger car purchase and 13,000 yuan for each fuel passenger car purchase. Advancing the upgrading of commercial trucks and new energy buses. 1) Expanding support for old commercial trucks. Building on the implementation of the 2024 support policy, the scope of subsidies for scrapping and upgrading old commercial trucks will be expanded to include commercial trucks with emissions standards of National IV and below (originally limited to commercial diesel trucks with emissions standards of National III and below). 2) Increasing the subsidy standards for the replacement of new energy urban buses and power batteries. Stepping up the electrification of urban buses, the bank will provide an average subsidy of 80,000 yuan per vehicle for buses older than 8 years and power batteries beyond the warranty period (up from 60,000 yuan). Accelerating the replacement of old electric bicycles. For individual consumers who trade in their scrapped old electric bicycles and purchase new ones, trade-in subsidies will be provided; for those who trade in their old lithium-ion battery electric bicycles for new lead-acid battery electric bicycles, subsidies may be increased accordingly. With the formal implementation of the new 3C certification standards for electric motorcycles in November 2024, coupled with the stimulation of the trade-in policy, the bank expects consumer sentiment for electric motorcycles to improve in 2025.