Open Source Securities: Creating popular models with benchmarking follow-up and differentiation leading strategies. Recommended SAIC Motor Corporation (600104.SH) and others.

Open Source Securities released a research report summarizing the two strategies used by car companies to create popular cars: benchmark following and differentiation leading. The effectiveness of the same competitive strategy varies under different eras of dividends, and companies should adopt corresponding strategies for creating popular cars based on the era dividends and competitive stages. The report recommends leading car companies and related industry targets for creating popular cars. The firm believes that whole vehicle targets that fit the logic of creating popular cars have a leading advantage. It recommends XPENG-W (09868), SAIC Motor Corporation (600104.SH), and beneficiaries: Chongqing Sokon Industry Group Stock (601127.SH), Anhui Jianghuai Automobile Group Corp., Ltd. (600418.SH), BAIC BluePark New Energy Technology (600733.SH), Guangzhou Automobile Group (601238.SH), LI AUTO-W (02015), GEELY AUTO (00175). In addition, in the component sector, the focus is on intelligence, Tesla, Inc. (TSLA.US), and Huawei's automotive industry chain. The main points of Open Source Securities are as follows: Different competition stages require different strategies for creating popular cars The firm summarized two strategies used by car companies to create popular cars: benchmark following and differentiation leading. They based on different eras (SUV, electrification, intelligence) to assess their applicability and evolutionary rules. The benchmark following strategy seizes market share by benchmarking mature popular cars and leveraging advantages such as cost-effectiveness, while the differentiation leading strategy opens up blue ocean markets through technical innovation, category innovation, and ecological innovation. The effectiveness of the chosen strategy for creating popular cars is determined by the market concentration and the competition stage. In the early stages of industry development, with low market concentration and few similar models, the differentiation leading strategy is more effective. As consumers gradually accept products, and market concentration increases, the effectiveness of benchmark following strategy significantly improves in the later stages of the industry. Exploring the method of creating popular cars based on the era and competition stage Under different eras of dividends, the same competitive strategy also has differences. The firm should consider the era dividend + competition stage to adopt the corresponding strategy for creating popular cars. (1) In the SUV era, Haval H6 differentiated itself in the blue ocean SUV race and became the best-selling SUV model, followed by Changan and Geely quickly catching up by benchmarking Haval H6 and creating CS75 and Borui to capture the SUV market. (2) In the electrification era, Tesla, Inc. created the Model 3 and Model Y super popular cars by extreme innovation, while BYD Company Limited, Li Xiang, and Great Wall took a different approach by developing popular cars through differentiated competition methods such as technology/race/category. Xiaopeng, Lixiang, and Geely benchmarked Tesla, Inc. Model 3, Li Xiang L7, BYD Company Limited eulogy PLUS, respectively, to create their own popular cars. (3) In the intelligence era, VorX successfully reduced the "Millionaire car" prices through strong product power, high intelligence, and multi-dimensional publicity to create the Chinese Deluxe Corporation car: VorX's new M7 and M9; Xiaomi Motors launched Xiaomi SU7 with user intelligent ecosystem and clever marketing and strong product power representing high appeal; Xiaopeng, from benchmarking Tesla, Inc. to differentiating building positioning the "first car for young people" MONA M03 and highly intelligent popular car P7+. Looking forward to 2025: Electric cars follow benchmarks + intelligent car differentiation leading, creating popular cars for this year (1) Electrification: In 2024, the national passenger car market showed a continuous month-over-month strengthening trend, with the penetration rate of new energy vehicles reaching 41% for the year, up by 9.5 percentage points. The strategy for creating popular cars in the post-electrification era is beginning to emerge. Zero Run, Geely Galaxy have successfully created popular cars through benchmark following strategies, and the firm believes that in 2025, with the continued intensification of electric vehicle competition, the benchmark following strategy is more suitable for the current stage. (2) Intelligentization: Since 2023, the penetration rate of high-end intelligent driving in urban areas has begun to rapidly increase and accelerated further in 2024. In 2025, the intelligentization era has reached the mid-term stage, and the differentiation leading strategy is more effective than benchmark following. However, the effectiveness of benchmark following strategy is also continuously highlighting. (3) 2025: It is recommended to focus on the new car release plans of XPeng, Inc. ADR Sponsored Class A, Huawei system, Li Auto, Inc. Sponsored ADR Class A, BYD Company Limited, GEELY AUTO, Chery Automobile, Chongqing Changan Automobile, LEAPMOTOR, Great Wall Motor. Risk warning: Passenger car industry demand falls short of expectations; intensified competition in the automotive industry; electrification and smart transformation falling short of expectations; policy support falling short of expectations; substantial fluctuations in raw material prices.