Guosen: Pay attention to the earnings reports in the automotive sector. We are optimistic about the continued acceleration of exports in passenger vehicles, heavy trucks, buses, and motorcycles.

Guosen released a research report stating that domestic vehicle manufacturers are continuously advancing channel development and enriching their product matrix, with the scale of overseas expansion accelerating. In July 2026, nationwide retail sales of passenger cars reached 1.461 million units, with a cumulative total of 10.173 million units for January to July. In July, retail sales of new energy passenger cars totaled 951,000 units, and from January to July, sales reached 5.668 million units, achieving a penetration rate of 65.1%, an increase of 11.6 percentage points year-on-year and 2.1 percentage points month-on-month. In the medium to long term, with the rise of domestic brands and the trend of electric intelligence, investment opportunities in overseas expansion and industrial upgrades (such as Siasun Robot & Automation, intelligent driving, AI, etc.) are optimistic. Against the backdrop of the rise of Chinese manufacturing, the continued acceleration of the overseas expansion of passenger cars, heavy trucks, buses, and two-wheeled vehicles is promising. The main points from Guosen are as follows: The overseas expansion of domestic passenger cars, heavy trucks, buses, and two-wheeled vehicles continues to accelerate. Domestic vehicle manufacturers are consistently advancing channel development and enriching their product matrix, with overseas expansion accelerating. In the passenger vehicle sector, from January to July 2026, passenger car exports increased by 72.5% year-on-year, while exports of new energy passenger cars reached 2.77 million units, a year-on-year increase of 129%. In the heavy truck sector, benefiting additionally from the increased infrastructure and logistics demands in regions like Africa and Southeast Asia, and the continuous replacement of used European and American brands by domestic brands, exports in the first half of the year reached 230,000 units, a growth of 43% year-on-year. In the bus sector, as the global economy recovers and travel demand improves, along with various major events and exhibitions taking place as scheduled, domestic exports of large and medium buses reached nearly 30,000 units in the first half of 2026, reflecting a year-on-year increase of 12%. In the two-wheeled vehicle sector, Chinese brands are actively advancing overseas channel development, with exports of two-wheeled fuel motorcycles reaching 7.18 million units in the first half of the year, an increase of 18% year-on-year. Sales Tracking According to the China Association of Automobile Manufacturers, in July 2026, nationwide retail sales of passenger cars totaled 1.461 million units, a decrease of 20.9% year-on-year and a decrease of 8.8% month-on-month, with a cumulative total of 10.173 million units from January to July, down 20.3% year-on-year. In July, wholesale sales of passenger cars by manufacturers were 2.252 million units, down 0.2% year-on-year and down 4.5% month-on-month. The retail of new energy passenger cars stood at 951,000 units in July, a year-on-year decrease of 3.9% and a month-on-month decrease of 5.8%; from January to July, the retail of new energy passenger cars totaled 5.668 million units, a decrease of 12.5% year-on-year. The penetration rate of new energy passenger cars in July was 65.1%, up 11.6 percentage points year-on-year and 2.1 percentage points month-on-month. Market Performance This Month In July, the CS automotive sector fell by 0.63%, with CS passenger vehicles rising by 14.38%, CS commercial vehicles rising by 5.16%, CS automotive parts declining by 9.7%, CS automotive sales and services increasing by 8.18%, and CS motorcycles and others rising by 10.31%. During the same period, the CSI 300 index dropped by 7.86%, and the Shanghai Composite Index fell by 6.4%. The CS automotive sector outperformed the CSI 300 index by 7.23 percentage points and the Shanghai Composite Index by 5.77 percentage points. Cost Tracking Overall, as of August 10, 2026, the prices of float glass, aluminum ingots, and zinc ingots have changed year-on-year as follows: -13.7%, +14.5%, and +11.6%, respectively, with month-on-month changes of -1.1%, +4.5%, and +3.8%, respectively. Inventory In July, the comprehensive inventory coefficient for automotive dealers was 1.48, a decrease of 6.3% month-on-month and an increase of 9.6% year-on-year. The inventory warning index for Chinese automotive dealers stood at 61.1%, up 3.9 percentage points year-on-year and up 3.9 percentage points month-on-month, indicating that the inventory warning index is above the breakeven line. Market Attention 1) Industry Dynamics: Yushu Technology is about to go public; domestic automakers are gradually expanding their overseas production capacity; 2) Market Focus: Earnings season trends in the sector, progress on North America's power shortage supply chain, rebound opportunities for humanoid Siasun Robot & Automation; 3) New Cars: Notable introductions include the Zhun Jie V680/V800, the Lantu Zhui Guang S, and the Wei brand V8X. Risk Warning: Risks related to tightening automotive supply chains, economic recovery not meeting expectations, and sales not meeting forecasts.