Multiple positive factors boosted the market! The auto parts sector surged nearly 6% during the session. Will U.S. tariffs offer more possibilities for Chinese EVs?

SMM April 10 News: On April 10, amid the continued rebound in the morning session, the auto parts sector surged rapidly during the day, with the index rising nearly 6% at one point. Although the gains narrowed slightly later, the index still closed up 3.48% for the day. In terms of individual stocks, Junchuang Technology and Shuanglin Co., Ltd. rose more than 10%. Six stocks, including Hailian Jinhui, Lianming Co., Ltd., Guansheng Co., Ltd., Zhenghe Industry, Dema Precision, and Tianqi Mold, hit the daily limit. Xianglou New Materials, Huayuan Co., Ltd., and others rose more than 6%. On the news front, on April 9, Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), stated that the US tariff increase has provided greater development space for Chinese EVs in overseas markets. He believes that in the past, Chinese cars faced a complex environment in overseas markets, but now the world trade order is showing a multipolar development trend, which has instead created relatively independent development spaces for Chinese cars in various countries. The core of intelligent electrification is electrification, and the core of electrification is the industry chain, where China holds a significant advantage. The CPCA believes that efforts should be made to develop small and micro EVs and plug-in hybrid models to expand the presence of Chinese EVs in overseas markets. Additionally, on April 10, Wang Qing, Deputy Director of the Market Economy Research Institute of the Development Research Center of the State Council, stated that policies will still have a significant boosting effect on auto consumption this year. Wang Qing predicts that this year's subsidy policy will cover approximately 25 million passenger cars, stimulating the potential of lower-tier markets and the central and western regions, and is expected to boost vehicle scrappage and replacement consumption by over 2 million units. Wang Qing judges that there is no significant pre-consumption effect this year, with 500,000 to 1 million units of suppressed new car consumption demand yet to be released. Regarding the NEV market trend, Wang Qing believes that domestic NEV sales are expected to reach 17 million units this year, with a market share approaching 58%. Moreover, the passenger car market performed exceptionally well in March. According to the latest data released by the CPCA, national passenger car retail sales in March totaled 1.94 million units, up 14.4% YoY and 40.2% MoM. Cumulative retail sales since the beginning of the year reached 5.127 million units, up 6% YoY. Cui Dongshu, Secretary General of the CPCA, analyzed that in recent years, domestic car retail sales have shown a trend of starting low and ending high. March retail sales were only slightly below the highest level of 1.98 million units in March 2018, ranking high in historical March retail sales. Driven by the national dual-new policy, the price war has been relatively mild, and the cut-throat competition has improved. The YoY retail growth rate in March this year was the highest in nearly 10 years, reversing the trend of low growth rates in March over the past decade. From the perspective of NEV retail penetration, the penetration rate of NEVs in the overall domestic passenger car market reached 51.1% in March, up 8.7 percentage points YoY. It has been three months since the last time the penetration rate exceeded 50%. Looking ahead to the April car market trend, the CPCA predicts that under the support of multiple favorable factors, the passenger car market is expected to continue its steady growth. Additionally, the CPCA stated that with the national and local policies promoting consumption, the spring auto show offline activities will fully activate the market atmosphere and accelerate the gathering of popularity. The timely holding of the Shanghai Auto Show and the model release activities during the promotion period of the Shanghai Auto Show, combined with the implementation of local consumption promotion policies, will undoubtedly become a catalyst and trigger for boosting domestic auto consumption. Guotai Haitong previously released a research report stating that in terms of total volume, the car market rebounded MoM in March, mainly due to the post-Chinese New Year recovery cycle in February and the successive release of trade-in policies across regions. Structurally, the March sales of BYD, Geely, Leap Motor, and XPeng saw significant YoY growth, benefiting from their strong new car cycles.

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Multiple positive factors boosted the market! The auto parts sector surged nearly 6% during the session. Will U.S. tariffs offer more possibilities for Chinese EVs?

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