JP Morgan: Demand for passenger cars in mainland China continues to be weak in December. Subsidies may continue next year, but with new requirements.

JPMorgan Chase released a research report stating that industry data shows that in November, mainland China's passenger car sales increased by only 3% month-on-month, lower than the seasonal level. Weak demand is mainly due to the government subsidies being exhausted earlier than expected, leading to consumers adopting a wait-and-see attitude. The moderate guidance on fourth-quarter sales from major electric car manufacturers, along with data from the first week of December, all indicate that December may continue the weak trend. The bank believes that there is a more than 50% chance that government subsidies or other forms of stimulus measures will continue into next year, but there may be increased requirements for vehicle technology, such as energy efficiency of new energy vehicles. The bank expects that if subsidies continue next year, domestic passenger car demand will remain flat; if there are no subsidies, it may decrease by 3% to 5%. Therefore, the performance in exports and competition for domestic market share will be crucial for car companies. Overall, in either scenario, the bank believes that there is a chance for first-quarter new energy passenger car demand to decrease by about 30% compared to the previous quarter, and be lower than the seasonal level.