Sinolink Securities: Passenger car industry will face certain challenges, focusing on the opportunities in China under the reconstruction of the global landscape.

CICC released a research report stating that domestic sales have gradually exceeded the previous peak in 2017. Looking ahead to 2026, the bank believes that the resilience of sustained growth needs to be observed. If there are still certain levels of central and local subsidy policies, the bank predicts that domestic demand will remain stable. In terms of new energy, on one hand, technological innovation and model iteration on the supply side will drive penetration rates, while on the other hand, there may be a temporary overdraft due to the phase out of the tax incentives by the end of 2025. The bank predicts that domestic sales of new energy vehicles are expected to maintain double-digit growth. Key points from CICC: Commercial vehicles: opening up growth space overseas; focusing on the trend of electrification and intelligence The bank believes that in 2026, the policy of scrapping and renewing heavy trucks may continue, with domestic demand still supported and strong demand in Asia, Africa, and Latin America driving continued export growth. The industry total is expected to increase by +5% year-on-year to 1.05-1.10 million vehicles. The bank predicts that the penetration rate of new energy heavy trucks in 2026 will reach around 30%; breakthroughs from 0 to 1 are expected in L2+ level assisted driving heavy trucks, and the penetration rate may reach single digits by 2026. Parts and components: overseas markets provide profit and valuation support With challenges facing domestic demand for passenger cars, the growth potential of China's parts and components industry chain may shift from domestic-driven to external expansion. In 2026, the bank recommends focusing on the trend of orders from European car companies for new energy vehicle models. Siasun Robot & Automation and autonomous driving continue to deliver Humanoid Siasun Robot & Automation is gradually entering the mass production stage, with leading and core assets gradually emerging. Additionally, software iteration is a key focus for future development. With the continuous improvement of regulations in the intelligent driving industry, 2026 may be the year of mass production starting from L3, which is expected to drive the continuous increase in penetration rate of the intelligent driving industry chain. Risk Warning: Subsidies may not meet expectations, overseas market expansion may not meet expectations, and the development of new industries may not meet expectations.