Guolian: The large vehicle market maintains rapid growth, looking forward to breakthroughs in independent brands.

Guolian released a research report stating that there has been a significant change in the domestic large car market, showing a trend of high-speed growth. From the sales data, the sales of domestic large cars have been continuously increasing since 2018, with a significant average annual compound growth rate. At the same time, the penetration rate of new energy vehicles is rapidly increasing, and the trends of electrification and intelligence are obvious, accelerating the reshaping of the domestic large car market landscape and providing strong support for the breakthrough of domestic brands. Although domestic brands still face certain challenges at present, there is a broad space for future development, and the prospects for the large passenger car market are promising, suggesting a focus on related enterprises. Guolian's main points are as follows: Significant changes in the large car market, increase in market share of domestic brands The domestic large car market maintains high-speed growth, with impressive performance by domestic SUVs. This report defines high-end large cars as C/D-class sedans, C/D-class SUVs, and MPVs with prices above 200,000 RMB. The sales of domestic large cars increased from 1.19 million vehicles in 2018 to 2.83 million vehicles in 2023, with an average annual compound growth rate of 19.0%. In the first three quarters of 2024, sales of large cars reached 2.3 million vehicles, an increase of 19.6% year-on-year. By brand, domestic brands such as BYD Company Limited, WENN, and Ideal are leading the large car market, accelerating the capture of market share. By vehicle type, large SUVs are leading the growth, with an average annual compound growth rate of 46.3% from 2018 to 2023. In terms of energy forms, the penetration rate of new energy vehicles in the large car market is rapidly increasing, rising from 3.1% in 2018 to 49.1% in 2023. Continuous increase in market share of domestic brands in the large car market The market share of domestic SUVs/MPVs/sedans has increased from 28.0%/13.9%/1.7% in 2018 to 79.6%/51.9%/53.5% in the first three quarters of 2024. (1) In the SUV market, domestic brands have achieved comprehensive breakthroughs, with market shares exceeding 70% in various price segments in the first three quarters of 2024. Models such as WENN M7 and M9 have performed well. (2) In the MPV market, market shares of domestic models in the price segments of 200,000-300,000 RMB, 300,000-400,000 RMB, and above 400,000 RMB are 59.1%, 43.3%, and 77.1% respectively in the first three quarters of 2024. Among them, the market share of the 300,000-400,000 RMB price segment is lower, and brands such as Toyota Sienna and Great Wall's model are still competitive. (3) In the large sedan market, models such as BYD Company Limited's Han and Xpeng's P7 lead the market share of sedans below 400,000 RMB, but the market above 400,000 RMB is still dominated by joint ventures, with a domestic brand share of only 3.1%. Electrification and intelligence help domestic brands break through The penetration rate of new energy vehicles is positively correlated with the market share of domestic brands and is reshaping the domestic large car market. The penetration rate of new energy vehicles in the large car market increased from 3.1% in 2018 to 61.9% in the first three quarters of 2024; the market share of domestic brands increased from 8.6% in 2018 to 64.8% in the first three quarters of 2024. Intelligentization is expected to further increase the market share of domestic brands as the penetration rate of L2+ intelligentization technology increased rapidly from 2.6% in 2022 to 6.0% in 2023, with an expected increase to 21% in 2025 and 32% in 2030. There is still a lot of space for domestic brands in the large sedan, MPV, and import car markets There is ample room for domestic substitution in the large sedan market above 400,000 RMB, with annual sales remaining at around 450,000 vehicles. In the MPV market, models like the Buick GL8 and Toyota Sienna remain competitive, and domestic brand models are expected to accelerate substitution. The import market remains a blue ocean, with models like the Toyota Alphard and Mercedes-Benz S-Class selling well. Domestic brands can leverage electrification, intelligentization, and cost-effectiveness to create similar models to compete with popular import cars. With the rich supply of domestic brand large cars and the trend of electrification and intelligentization, the sales of domestic brand large cars are expected to continue growing. Investment recommendation: Positive outlook on the large passenger car market Recommend focusing on enterprises actively investing in the domestic large passenger car market, as they are favored by consumers for their spaciousness and comfort, especially with significant growth in sales of large plug-in hybrid SUVs and pure electric sedans. Recommended companies to focus on include BYD COMPANY (01211), GEELY AUTO (00175), Chongqing Sokon Industry Group Stock (601127.SH), LI AUTO-W (02015), and suggest paying attention to Anhui Jianghuai Automobile Group Corp., Ltd. (600418.SH) and BAIC BluePark New Energy Technology (600733.SH). Risk warning: Increase in market competition risk; new car supply lower than expected risk; technology development lower than expected risk.