Daiwa: EU Approval of Minimum Import Prices Benefits BYD (01211) and Geely Auto (00175)

Daiwa has released a research report stating that the European Union has issued price commitment guidelines to Chinese exporters, allowing eligible automakers to replace the existing high tariffs with a minimum import price. Daiwa believes this move is slightly positive for companies not engaged in low-price competition in Europe, such as BYD COMPANY (01211) and GEELY AUTO (00175). The report suggests that the selling prices of Chinese-branded electric vehicles in Europe are unlikely to decrease. The real positive impact lies in the fact that automakers can retain the tariff differential that would otherwise have been paid to the EU, which is expected to improve profit margins. Daiwa expects automakers like BYD and Geely, which are already performing well in European sales, to benefit most directly, as they are poised to enjoy higher profit margins while maintaining their current selling prices.