CICC released a research report stating that by 2026, China's auto market may face pressure from subsidy reductions and demand exhaustion, potentially weighing on sales. However, considering the government's supportive policies for domestic demand, passenger vehicle sales could follow a low-then-high trajectory. The replacement of traditional fuel vehicles remains incomplete, and new energy vehicles (NEVs) may still maintain double-digit year-on-year growth.
From a structural perspective, the NEV sector is still undergoing reshuffling, with intense competition leading to declining market shares for leading players while other brands actively seek breakthroughs. With weak overall domestic demand for passenger vehicles, CICC remains relatively optimistic about the more resilient mid-to-high-end NEV market and growth opportunities in hybrid vehicles driven by user experience upgrades. The report suggests focusing on three key themes: counterattacks by industry leaders, aggressive moves by latecomers, and advancements in autonomous driving.
Key takeaways from CICC’s analysis include: 1. **Shifting Consumption Trends**: Under the influence of price competition and trade-in policies, the NEV passenger vehicle market in 2025 has seen a downward shift in price segments, with sub-100,000 RMB models gaining significant share. Battery electric vehicles (BEVs) have taken over from hybrids as the primary growth driver, with mass-market BEVs delivering strong growth while mid-to-high-end hybrids continue expanding despite a high base. 2. **Resilience in Mid-to-High-End NEVs**: Despite overall market pressure, CICC expects mid-to-high-end NEVs to demonstrate resilience, benefiting from lower exposure to subsidy reductions and tax incentive phase-outs. Additionally, the entry of more BEV makers into hybrid and large-battery solutions could drive further penetration growth. 3. **Autonomous Driving as a Turning Point**: With L3 pilot programs underway, high-level autonomous driving capabilities may become a key differentiator for automakers, potentially marking the start of intensified competition in smart driving technology.
CICC highlights the following investment opportunities: - **Strategic Adjustments by NEV Leaders**: LI AUTO (02015), BYD COMPANY (01211). - **Turnaround Potential for Latecomers**: CHERY AUTO (09973), GWMOTOR (02333), Chongqing Changan Automobile (000625), SAIC Motor (600104), GEELY AUTO (00175). - **Brand and Tech-Driven Automakers**: Seres Group (601127), LEAPMOTOR (09863), NIO-SW (09866), XPENG-W (09868).
**Risks**: Intensifying price competition, weaker-than-expected policy support, and delays in autonomous driving progress.
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