Guotai Junan Securities: The strong market demand in the automotive industry is expected to continue.

A research report from China Galaxy Securities pointed out that in Q1 of 2025, the automotive industry index rose by +12.51% relative to the Shanghai and Shenzhen 300 index, outperforming the Shanghai and Shenzhen 300 index in the sectors of passenger vehicles, commercial vehicles, auto parts, motorcycles, and other automotive sales and services. In Q1, driven by the continuation of the policy of replacing old with new subsidies, the automotive market saw high growth in sales volume, combined with the hot market for robots since the beginning of the year, resulting in significant excess returns for the automotive sector. In Q1 of 2025, the proportion of automotive stock investments in the top 10 holdings of funds was 3.47%, up by +1.30pct year-on-year and +0.53pct month-on-month. Public funds continued to increase allocation to the automotive sector, with holdings increasing for the fifth consecutive quarter, reaching a historical high, with top automotive companies such as BYD, Leapmotor, and NIO, as well as robot-related targets, favored by investors. Looking ahead to Q2 of 2025, the Shanghai Auto Show will see multiple new energy vehicles from domestic brands, ushering in a period of intensive new product supply, which is expected to further boost consumer enthusiasm for car purchases, drive consumer demand for cars, and lead to the continuation of a strong automotive market outlook with the sector still offering good investment value.