A report from China Merchants Securities International indicates that in July, leading domestic automakers maintained their sales momentum, while the performance of emerging electric vehicle (EV) brands was mixed. LEAPMOTOR (09863) surpassed 10,000 monthly sales for the first time.
Exports remain the most distinct structural growth driver, with CHERY AUTO (09973), BYD COMPANY (01211), GEELY AUTO (00175), and GWMOTOR (02333) leading in the proportion of overseas sales. Among the leading domestic brands, BYD COMPANY, GEELY AUTO, CHERY AUTO, and GWMOTOR recorded July sales of 419,000, 250,000, 262,000, and 108,000 units respectively, representing year-on-year growth of 22%, 5%, 24%, and 4%.
In the emerging brand segment, sales figures for LEAPMOTOR, Harmony Intelligent Mobility Alliance, XPENG-W (09868), NIO-SW (09866), Zeekr, LI AUTO-W (02015), XIAOMI-W (01810), Deepal, Arcfox, and Voyah (07489) were 101,300, over 45,000, 38,000, 35,900, 35,800, 30,500, over 30,000, 29,200, 23,500, and 13,200 units respectively. The highest year-on-year growth rates were recorded by Arcfox (+150%), Zeekr (+111%), and LEAPMOTOR (+102%). LEAPMOTOR notably broke through the 100,000-unit sales milestone for the first time, significantly outpacing other emerging EV players.
The report suggests that negative factors will be largely priced in during the interim reporting season. The medium-to-long-term investment theme should focus on capacity expansion overseas. Considering a lower comparison base in the second half of the year, larger government subsidy funds, a stronger seasonal effect, and the potential for advance purchases ahead of next year's subsidy uncertainties, the industry is expected to see marginal improvements in the latter half of the year. The most negative factors related to weak domestic demand for the full year are expected to clear during the August interim reporting period, making capacity expansion overseas a new strategic focus for automakers.
Analysts predict the market trend for next year will shift to "stable domestic demand, strong overseas expansion." Long-term investment opportunities are identified along three main lines: upgrades in new energy vehicle structures, volume growth in premium brands, and the advancement of overseas localized production capacity. The current period is seen as a mid-cycle opportunity to invest in quality companies, particularly those leading in overseas capacity expansion. The capacity expansion theme favors leading companies with large export volumes, with a recommended investment portfolio of GEELY AUTO, BYD COMPANY, and CHERY AUTO. This is followed by a portfolio of emerging brands with smaller current export volumes but significant growth potential, such as XPENG-W and LEAPMOTOR.
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