CICC: There is still room for improvement in the Chinese automotive market, Policy support is still needed to raise the ceiling of ownership and stimulate the potential for replacement.

The CICC report states that we define the "effective replacement cycle" as the ratio of a country's car ownership to the annual sales volume. The mature car market in the United States averages 20 times, while in Japan and South Korea it averages 13-14 times. Looking ahead, assuming that China's passenger car ownership per thousand people increases to 300 vehicles, the "effective replacement cycle" will reach 15 times. This corresponds to a potential stable domestic sales volume of 28 million vehicles, with a growth potential of about 20% compared to 2024. To effectively stimulate car purchasing demand, we believe that on one hand, raising the ceiling of car ownership is essential, with economic growth being key. Additionally, improving infrastructure and enhancing the car usage environment can increase social carrying capacity. On the other hand, stimulating replacement potential can be achieved by expanding the scope of subsidies for trading in old cars for new ones, which still has a significant operational space. In addition, improving the construction of the second-hand car market system, lowering the consumption threshold, enhancing vehicle circulation efficiency, and thereby driving new car consumption.