BOCOM INTL: The car market welcomes a good start in February, and it is expected that the passenger car market will continue to heat up.

BOCOM INTL released a research report stating that, benefitting from the policies of scrappage and replacement updates, as well as the marketing activities of car manufacturers, the car market in February 2025 saw a strong start, reaching a historical high in retail sales for February over the years. After the Spring Festival holiday, various industries quickly returned to normal operations, with many car manufacturers (including Tesla, Inc. (TSLA.US), Xiaopeng (09868), Zhiji, Avita, and Li Xiang (02015)) increasing promotional efforts and releasing new car models. It is expected that the passenger car market in mainland China will continue to warm up, with passenger car production and sales in March expected to achieve a significant month-on-month growth. BOCOM INTL's main points are as follows: - In February, the passenger car market saw a strong start, with retail sales of passenger cars increasing by 26% year-on-year to 1.386 million units. - In February 2025, the national passenger car market retail sales reached 1.386 million units, with a year-on-year and month-on-month change of +26.0% and -22.8%, respectively. The year-to-date retail sales of passenger cars in January-February 2025 increased by 1.2% year-on-year. Independent brands performed better than the overall industry, with independent brand retail sales reaching 910,000 units in February, with year-on-year and month-on-month changes of +51% and -17%, respectively. The national retail market share of independent brands increased by 10.6 and 4.6 percentage points year-on-year and month-on-month to 65.6%, respectively; while mainstream joint venture brand retail sales reached 330,000 units, with year-on-year and month-on-month changes of -2% and -33%, respectively, with German/Japanese/American brand retail market shares of 17%, 10.7%, and 5%, respectively (down by 4.3, 3.7, and 1.4 percentage points year-on-year). - The strong growth trend of new energy vehicles in February maintained year-on-year, with a penetration rate reaching 49.5%. - In February, the retail sales of new energy vehicles reached 686,000 units, with year-on-year and month-on-month changes of +79.7% and -7.8%, respectively. The penetration rate of new energy vehicles reached 49.5%, with year-on-year and month-on-month changes of +15 and +8 percentage points, respectively. By brand, the penetration rate of new energy vehicles for independent brands reached as high as 70% in February, while the penetration rates for Deluxe Corporation and joint venture brands were 23% and 4%, respectively. BYD Company Limited achieved sales of 206,000 units, with a market share of 30%; the overall retail market share of new forces increased by 2.6 percentage points year-on-year to 19.9%; Tesla, Inc.'s retail market share decreased by 4 percentage points to 3.9% year-on-year. - The growth rate of passenger car exports slowed down, with new energy vehicles accounting for 34%. - In February, the total number of passenger car exports (including complete vehicles and CKD (completely knock-down mode)) reached 349,000 units, with year-on-year and month-on-month changes of +11% and -8%, respectively. Passenger car manufacturers exported 730,000 units in January-February, a 6% year-on-year increase. In February, the export of new energy vehicles reached 118,000 units, with a year-on-year increase of 27%, accounting for 34% of the total exports. Independent brands exported 310,000 units in February, accounting for 89% of the total exports, with year-on-year and month-on-month changes of +27% and -1%, respectively; joint venture and Deluxe Corporation brands exported 35,000 units, with a year-on-year decrease of 47%. As for recommendations, it is advised to focus on quality targets in the passenger car sector, such as BYD Company Limited (01211) with intelligent driving + DM5.0 models + exports; and XPeng, Inc. ADR Sponsored Class A (09868) with M03 and P7 models.