[Honda China's March Sales Fell 34%] On April 8, Honda China released its latest sales data: March end-user sales were 36,201 units, down 34.34% YoY; cumulative Q1 sales reached 122,470 units, down 22.4% YoY. Meanwhile, Honda's cumulative end-user sales in China surpassed 20 million units.

On April 1, BYD released its March sales data, with monthly sales of 300,222 units, passenger vehicle and pickup exports of 119,591 units, and cumulative NEV sales exceeding 15.8 million units.

[Three Consecutive Monthly Sales Championships, SAIC Sold 973,000 Vehicles from January to March] SAIC released its latest sales data. In March, it achieved vehicle sales of 376,000 units, successfully securing “three consecutive monthly sales championships” since the start of this year; from January to March, cumulative wholesale sales reached 973,000 units, up 3% YoY, maintaining a steady upward trend; retail sales reached 1.008 million units, making it the only automaker in China’s auto industry to surpass 1 million sales in Q1.

In mid-March 2026, CAAM and the China Automotive Power Battery Industry Innovation Alliance successively released relevant data on the auto and power battery markets for February 2026. According to CAAM’s analysis, auto production and sales declined YoY under the combined impact of multiple factors, including policy transition adjustments, front-load demand release, the timing shift of the Chinese New Year holiday, insufficient willingness to consume, and a high base in the same period last year. Among them, the passenger vehicle market and NEV market both declined YoY, while the commercial vehicle market continued to improve, and auto exports grew rapidly. .......SMM compiled the relevant data on the auto market and power battery market for February 2026 for readers’ reference. Automobiles CAAM: February Auto Output and Sales Reached 1.672 Million and 1.805 Million Units, Respectively In February, auto output and sales totaled 1.672 million and 1.805 million units, down 31.7% and 23.1% MoM, and down 20.5% and 15.2% YoY, respectively. From January to February, auto output and sales totaled 4.122 million and 4.152 million units, down 9.5% and 8.8% YoY, respectively. CAAM: February NEV Sales Reached 765,000 Units; January-February NEV Output and Sales Reached 1.71 Million Units In February, NEV output and sales totaled 694,000 and 765,000 units, down 21.8% and 14.2% YoY, respectively. NEV sales accounted for 42.4% of total new vehicle sales. From January to February, NEV output and sales totaled 1.735 million and 1.71 million units, down 8.8% and 6.9% YoY, respectively. NEV sales accounted for 41.2% of total new vehicle sales. CAAM: Auto Exports Continued to Grow in February; NEV Exports up 1.1x YoY In February, NEV exports were 282,000 units, down 6.6% MoM, up 1.1x YoY ; traditional fuel vehicle exports were 391,000 units, up 2.8% MoM and up 26.2% YoY . From January to February, NEV exports were 583,000 units, up 1.1x YoY; traditional fuel vehicle exports were 769,000 units, up 22.2% YoY . Regarding the auto market in February, CAAM said that this year’s Chinese New Year fell in mid-to-late February, and the holiday was extended. As a result, there were only 16 effective working days in February, which had a certain impact on enterprise production and operations, and overall market activity declined. Judging from industry performance from January to February, auto production and sales declined YoY under the combined impact of multiple factors, including policy transition adjustments, front-load demand release, the timing shift of the Chinese New Year holiday, insufficient willingness to consume, and a high base in the same period last year. Among them, the passenger vehicle market and NEVs declined YoY, while the commercial vehicle market continued to improve and auto exports grew rapidly. This year’s government work report explicitly proposed to stimulate the endogenous momentum of household consumption and advance consumption-promoting policies in parallel, continue to amplify the effect of the policy package, further rectify “involution-style” competition, and foster a sound market ecosystem. It is believed that, as detailed local subsidy measures are fully implemented after the holiday, spring auto show sales promotions begin, and automakers roll out new models one after another, this will help boost consumer confidence, energize the auto market, and promote the healthy and stable operation of the industry. Subsequently, the CPCA also released data on the passenger vehicle market for February 2026. From February 1 to 28, retail sales in China’s passenger vehicle market reached 1.034 million units, down 25.4% YoY and down 33.1% MoM. Cumulative retail sales since the beginning of the year totaled 2.578 million units, down 18.9% YoY. As market factors have become more complex, the pattern of “low at the beginning and high at the end” in annual sales has become more evident in recent years. Affected by disruptions such as Chinese New Year, February retail sales have seen wild YoY swings over the years, for example: 2019 (-19%), 2020 (-79%), 2021 (373%), 2022 (5%), 2023 (10%), 2024 (-21%), and 2025 (26%). Therefore, the -25.4% in 2026 was at the lower-middle end of the range of sharp fluctuations in February growth rates over the years. NEVs, retail sales in the passenger NEV market were 464,000 units in February, down 32.0% YoY; from January to February, retail sales in the passenger NEV market were 1.06 million units, down 25.7% YoY. Retail sales of conventional fuel passenger vehicles were 570,000 units in February, down 19% YoY. In February, passenger NEV producer exports were 269,000 units, up 124.7% YoY and down 7.0% MoM; from January to February, passenger NEV producer exports were 559,000 units, up 114.7% YoY, while exports of conventional fuel passenger vehicles were 290,000 units in February, up 21% YoY. NEV exports, as the scale advantages of China’s new energy vehicles become more apparent and market expansion demand grows, more and more China-made new energy brand products are going outside China, and their recognition outside China continues to improve. Among them, PHEVs accounted for 38% of NEV exports (38% in the same period last year). Although they have recently been affected by some disruptions from external countries, exports of independently developed PHEVs to developing countries have grown rapidly, with bright prospects. In February, passenger NEV exports were 269,000 units, up 124.7% YoY and down 7.0% MoM. They accounted for 48.5% of passenger vehicle exports, up 14.8 percentage points YoY; BEVs accounted for 58% of NEV exports (59% in the same period last year), and A00- and A0-class EVs, the core focus, accounted for 55% of BEV exports (56% in the same period last year). The CPCA stated that after the NEV purchase tax exemption policy, which had been implemented since September 2014, was formally phased out at the end of December 2025, the NEV market in 2026 entered a recovery period amid adjustments to tax subsidies. Some consumers brought forward purchases to 2025 to benefit from the policy, resulting in a certain pull-forward effect in January-February this year. This was an expected short-term fluctuation and does not represent the market’s long-term trend. However, with Chinese New Year falling later this year, making it a major consumption year, growth in the auto market diverged, and NEVs did not perform strongly, indicating that more policy support is still needed. Key features of the passenger vehicle market in February 2026: 1. In February, passenger vehicle producers’ daily average exports hit a record high for the month, fully demonstrating the steadily improving competitiveness of China’s automotive industry in the global market and continued robust demand outside China; 2. The retail pullback after the expiration of the vehicle purchase tax exemption was evident, but structural changes were also clear, namely a higher share of high-end NEVs and a lower share of entry-level consumption, which is conducive to the industry’s transition toward high-quality development; 3. New vehicle launches were steady in 2026, and together with the advance of anti-involution efforts curbing disorderly price cuts, NEV sales promotions stayed at 10.4% in February, remaining around 10% for six consecutive months. No vicious volume discount competition emerged, helping maintain market order; 4. The historical pattern of internal combustion engine vehicles outperforming NEVs before Chinese New Year continued again. In February, retail sales in China of internal combustion engine vehicles fell 19% YoY, while pure electric vehicle retail sales fell 35% YoY, range-extended vehicles fell 16% YoY, and PHEVs fell 31% YoY. As time goes by, consumers are expected to gradually adapt to the normalization of NEV taxation, and the NEV market is expected to return to a track of positive growth; 5. This February was still a pre-Chinese New Year consumption phase dominated by internal combustion engine vehicles. NEV penetration rate in retail sales in China was 44.9%, and export penetration rate was 48.5%, which was a relatively good performance; 6. In February 2026, exports of self-owned-brand internal combustion engine passenger vehicles reached 247,000, up 21% YoY, while exports of self-owned-brand NEVs reached 231,000, up 110% YoY. NEVs accounted for 48.4% of self-owned-brand exports. In particular, the high growth of NEV exports in Europe, Southeast Asia, and other regions marked the expanding influence of China’s NEV brands in the international market, laying a solid foundation for future export growth. Power Battery In February, China’s cumulative sales of power and ESS batteries reached 113.2 Gwh, up 25.7% YoY In February, China’s sales of power and ESS batteries reached 113.2 Gwh, down 23.9% MoM, up 25.7% YoY . Of this, power battery sales were 74.5 Gwh, accounting for 65.9% of total sales, down 27.4% MoM and up 11.4% YoY; ESS battery sales were 38.6 Gwh, accounting for 34.1% of total sales, down 16.2% MoM and up 67.3% YoY. From January to February, China’s cumulative sales of power and ESS batteries were 262 Gwh, up 53.8% YoY . Of this, cumulative power battery sales were 177.2 Gwh, accounting for 67.6% of total sales and up 36.5% YoY; cumulative ESS battery sales were 84.8 Gwh, accounting for 32.4% of total sales and up 108.9% YoY. From January to February, cumulative power battery installations were 68.3 Gwh, with LFP installations accounting for 77.9% In February, China’s power battery installations were 26.3 Gwh, down 37.4% MoM and down 24.6% YoY. Of this, ternary battery installations were 5.7 Gwh, accounting for 21.7% of total installations, down 39.1% MoM and down 11.4% YoY; LFP battery installations were 20.6 Gwh, accounting for 78.3% of total installations, down 36.9% MoM and down 27.5% YoY. From January to February, cumulative power battery installations in China were 68.3 Gwh, down 7.2% YoY. Of this, cumulative ternary battery installations were 15.1 Gwh, accounting for 22.1% of total installations and up 0.6% YoY; cumulative LFP battery installations were 53.3 Gwh, accounting for 77.9% of total installations and down 9.2% YoY. More Than 60% of A/H-Share Automakers Achieved YoY Growth, March Auto Market Production and Sales Will See Rapid MoM Growth Earlier, CLS compiled the January-February sales performance of 14 A/H-share listed automakers, of which 9 achieved YoY growth, accounting for more than 60%, and 3 automakers recorded February sales outside China exceeding those in the Chinese market. Among emerging EV makers, Leap Motor still firmly held the top spot in deliveries, with 28,067 units delivered in February, up 10.99% YoY; cumulative deliveries in 2026 reached 60,126 units, up 19.16% YoY. While releasing its February delivery figures, Leap Motor said its March car purchase incentives had gone live, with discounts of up to 46,000 yuan for in-stock vehicles. Li Auto delivered 26,421 units in February, up 0.6% YoY. Cumulative deliveries in 2026 reached 54,089 units, down 3.74% YoY. As of February 28, 2026, Li Auto’s historical cumulative deliveries totaled 1.594 million units. Li Auto said that as of February 28, 2026, it had 539 retail centers nationwide, covering 160 cities; 548 after-sales repair centers and authorized service centers, covering 223 cities. Li Auto had put into use 4,054 Li Auto supercharging stations nationwide, with 22,447 charging piles. NIO delivered 20,797 new vehicles in February, up 57.65% YoY. Cumulative deliveries in the first two months of 2026 reached 47,979 units, up 77.34% YoY. To date, NIO has delivered a total of 1,045,571 new vehicles. At 22:33:18 on February 6, NIO completed its 100 millionth battery swap; during the 2026 Chinese New Year holiday, NIO provided a cumulative 2,073,500 battery swapping services, with daily average services up 29.4% YoY versus the Chinese New Year holiday last year. From February 15 to February 23, NIO Energy's cumulative highway charging and battery swapping volume exceeded 25.28 million kWh, accounting for 15% of the national highway charging and battery swapping total. Starting from February 18 (the second day of the Chinese New Year), NIO battery swapping set new single-day service records for five consecutive days. XPeng Motors delivered a total of 15,256 new vehicles in February, bringing cumulative deliveries in the first two months of 2026 to 35,267 units, down 42% YoY. In February, the all-new XPeng G6 launched in the UK, with the entire lineup equipped as standard with an 800V high-voltage platform and a new-generation LFP battery, while introducing an all-wheel-drive performance black edition for the first time. The XPeng G6 has now been exported to more than 40 countries and regions worldwide, covering Asia-Pacific, Europe, the Middle East and North Africa, and Latin America, and continues to win favour among an increasing number of overseas consumers. As for Xiaomi Auto, its deliveries exceeded 20,000 units in February, while January deliveries exceeded 39,000 units, bringing cumulative deliveries in the first two months of 2026 to 59,000 units. Notably, the Xiaomi YU7 continued to rank first in sales in February and has now held the top spot for six consecutive months. In February 2026, Xiaomi YU7 sales reached 20,196 units, ranking among the top three passenger vehicle models nationwide for the month. As for BYD, China's "EV king," February sales reached 190,190 units, retaining its position as China's NEV sales champion. In January-February 2026, BYD Group's cumulative sales reached 400,241 units, while cumulative overseas sales of passenger vehicles and pickups totaled 200,160 units, and cumulative new energy vehicle sales exceeded 15.5 million units. On March 5, BYD unveiled the second-generation blade battery. Wang Chuanfu, Chairman of BYD Group, said that the second-generation blade battery can charge from 10% to 70% in 5 minutes, and from 10% to 97% in just 9 minutes. The second-generation blade battery offers 5% higher battery energy density than the first-generation blade battery. Car models equipped with the second-generation blade battery include the Yangwang U7, Denza N9, Fangchengbao Tai 3, Seal 07, Datang, Sea Lion 06, Song Ultra, Fangchengbao Tai 7, Denza Z9GT, and Yangwang U8L, among which the Denza Z9GT has a driving range of 1,036 km. Regarding auto industry sales in February 2026, Cailian Press quoted an executive at a new carmaker as saying, "Affected by the longest-ever nine-day Chinese New Year holiday in February, the auto industry's effective production and sales period was significantly shortened, making it a typical off-season for auto consumption. Combined with the phased reduction in the vehicle purchase tax incentive, the auto industry as a whole remained subdued and full of challenges.” Looking ahead to the passenger vehicle market in March, the CPCA said that March this year had 22 working days, one more than the 21 working days in March 2025. As industries across the board rapidly returned to normal operations after the Chinese New Year holiday, production and sales growth in March is expected to rise sharply MoM. The post-Chinese New Year period is an important window for new product launches, and many producers rolled out a large number of new vehicles. Driven by national pro-consumption policies, many provinces and cities introduced corresponding measures to stimulate consumption, while the full resumption of offline activities such as auto shows will also accelerate the return of foot traffic. As prices of lithium carbonate, copper, and other materials have remained high recently, coupled with the continued anti-involution trend, producers are expected to launch relatively few new energy car models offering better-than-expected value for money, leaving limited potential for an explosive rebound in auto consumption. Although the recent Middle East crisis caused some transportation disruptions, China’s complete vehicle enterprises shifted from “chartering vessels and waiting for shipping space” to “building ships and controlling transport,” with rapid expansion of their own fleets, greater autonomy and control over shipping capacity, and significant optimization in cost and efficiency. Our sales support capabilities are stronger than those of other international automakers, and if the crisis does not last long, export transportation will not be significantly affected. As the national trade-in policy is fully implemented, the consumer potential for replacement and upgrade purchases will be gradually released, helping the auto market strengthen steadily in March. In 2026, policy subsidies and structural optimization in the auto industry will become key factors in leveraging overall market prosperity and accelerating the premiumization of new energy vehicles. Although the 2026 consumer goods trade-in subsidy fund of 250 billion yuan was down 50 billion yuan from 2025, the 100 billion yuan in special fiscal and financial coordinated funding to boost domestic demand can reduce financing costs for residents’ car purchases and automakers through loan interest subsidies and financing guarantees, effectively stimulating endogenous consumption momentum and expanding new room for domestic demand. Huachuang Securities pointed out that since March, the passenger vehicle retail market has begun to improve, with foot traffic and transactions gradually recovering, mainly due to the digestion of deferred wait-and-see demand from last year and the launch of new models. Attention should be paid to market acceptance of new vehicles after price increases and to dynamic adjustments by automakers. Although the subsidy amount per vehicle declined this year, coverage may expand. Combined with the low base in H2 last year, industry retail sales growth in H2 is expected to turn positive, with full-year retail growth expected at 1%, including +5% for EVs. Export data for January-February exceeded expectations, and full-year exports are expected to surpass 7.1 million units, boosting wholesale growth by about 3%, including +8% for EVs. In February, due to weaker demand during the Chinese New Year, the new energy penetration rate remained firm at 48%. Current total channel inventory is about 3.4 million units, an increase of about 600,000 units compared to the same period last year. Rising Prices of Memory Chips and Precious Metals, Some Automakers Warn of Cost Pressure It is worth noting that as memory chip and precious metal prices have fluctuated upward recently, some automakers in the market have begun trying to respond to supply chain cost pressure through “price increases.”Monitoring data from TrendForce showed that since H2 2025, prices of DDR4 memory used in automotive-grade DRAM have risen by more than 150% cumulatively, while DDR5 memory prices have surged by 300%. Data provided by UBS showed that over the past three months, automotive-grade DRAM prices as a whole increased by 180%. According to incomplete statistics, since the start of 2026, multiple automakers, including NIO, Li Auto, VOYAH, Xiaomi, and Zeekr, have issued warnings or been reported to be facing cost challenges brought by chip price increases. In a livestream, Deepal Chairman Deng Chenghao said that current production costs have risen by several thousand yuan compared with earlier levels, with the pressure mainly coming from wild swings in power battery and in-vehicle memory chip prices; Li Auto Vice President of Supply Chain Meng Qingpeng even warned that the supply fulfillment rate for automotive memory chips in 2026 may be less than 50%; Xiaomi Chairman Lei Jun mentioned in a livestream in January that the new Xiaomi SU7 is facing memory cost pressure that is jumping quarter by quarter, with memory cost per vehicle expected to increase by several thousand yuan. However, according to the latest news from NIO on March 11, NIO founder and chairman Li Bin said that rising prices of memory and other raw materials have impacted the cost of high-end new energy car models by 3,000 to 5,000 yuan respectively, with the total impact nearing 10,000 yuan. At present, NIO’s existing system can support the pressure brought by rising costs, and the company currently has no plan to adjust prices. At the Q4 and full-year 2025 earnings call, Li Auto President Ma Donghui said that in response to the impact brought by the current increase in parts prices, Li Auto will strengthen coordination with supply partners and sign long-term LTA agreements with relevant suppliers to lock in prices or allocations in advance. If there is a price adjustment mechanism, it will be strictly implemented in accordance with the contract; where there is no price adjustment mechanism, the company will also share costs with suppliers. It will absorb as much of the pressure from external price increases internally as possible, including through its self-developed range extender and self-developed chips. “Li Auto will comprehensively consider parts costs and user value in determining the pricing of new car models, and is confident that through a series of measures it can keep the impact of raw materials within a reasonable range,” Ma Donghui said. UBS warned that chip shortages may begin disrupting global auto production as early as Q2 this year, with EV manufacturers that are highly dependent on advanced chips expected to be affected the most.

Today, the most-traded BC copper 2603 contract opened at 90,360 yuan/mt. At the beginning of the session, copper prices tested a low of 90,110 yuan/mt, then fluctuated upward, approaching a high of 91,020 yuan/mt near the close, and finally settled at 90,790 yuan/mt, up 0.42%. Open interest fell to 4,485 lots, down 388 lots from the previous trading day, while trading volume dropped to 3,022 lots, down 3,104 lots from the previous session. On the macro front, Trump called on the US Fed to cut interest rates, but officials stated that inflation remains relatively high and there is no urgent need for rate cuts. US December retail sales data fell short of expectations, and copper prices maintained a fluctuating trend. On the fundamentals side, imported supply continued to arrive, leading to looser availability of spot material in the market. Demand side, weakened further as the holiday approached, with downstream enterprises having largely completed pre-holiday stockpiling, resulting in low purchase willingness at this stage. The market showed a clear pattern of weak supply and demand. The most-traded SHFE copper 2603 contract settled at 102,180 yuan/mt. Based on the BC copper 2603 contract price of 90,790 yuan/mt, its after-tax price is 102,593 yuan/mt. The price spread between the SHFE copper 2603 contract and BC copper was -413, maintaining an inverted spread which widened compared to the previous day.

SMM Morning Meeting Minutes: LME copper opened at $13,089/mt overnight, with prices initially trending lower to test $13,060/mt, then fluctuating upward to touch a high of $13,160/mt, followed by wide swings before finally settling at $13,100/mt, down 0.64%. Trading volume reached 12,200 lots, and open interest stood at 325,000 lots, down 1,683 lots from the previous session, overall showing a reduction in long positions. The most-traded SHFE copper contract opened at 101,660 yuan/mt overnight, initially fluctuating upward to touch a high of 102,100 yuan/mt, then experiencing wide swings while testing a low of 101,510 yuan/mt, before prices trended higher and finally settled at 101,730 yuan/mt, down 0.13%. Trading volume reached 34,800 lots, and open interest stood at 158,000 lots, down 1,466 lots from the previous session, overall showing a reduction in long positions.

I. Production and Sales Data According to public data released by authoritative institutions such as the China Association of Automobile Manufacturers (CAAM), the production and sales of fuel cell vehicles in China from January to May 2025 are as follows: (I) Overview of Core Data: Unit: 10,000 units Indicator May Data YoY Change Value (units) YoY Change Production 0.025 -37.2% 0.1 -25.0% Sales 0.0165 -62.9% 0.1 -26.1% Note: The data statistics cover fuel cell commercial vehicles (including buses and trucks), excluding passenger vehicles and stationary power generation applications. (II) Monthly Trend Analysis: 1. January-February: Affected by the Chinese New Year holiday and the policy transition period, the production and sales pace was relatively slow (with approximately 219 units produced and 252 units sold). 2. March: The implementation of local subsidy policies drove demand, with monthly production reaching 365 units and sales reaching 377 units, marking the peak for the quarter. 3. April-May: Stable growth was maintained, with monthly production of approximately 592 units and sales of 493 units. The expansion of infrastructure contributed to an increase in market penetration. II. Key Driving Factors: Policy Support: From January to May 2025, the national and provincial/municipal governments jointly issued 116 hydrogen energy-related policies. Expansion of Application Scenarios: Heavy-duty trucks and logistics vehicles accounted for a significant proportion, with demonstration projects in ports, ore areas, etc., being delivered in batches. Among them, Hydrogen Blue Times delivered 100 hydrogen-powered heavy-duty trucks to Handan, Hebei Province. Cost Reduction: The average price of fuel cell systems has dropped to approximately 1,000 yuan/kW (a 47% decrease YoY), driving an improvement in the economic efficiency of the entire vehicle. III. Regional and Corporate Dynamics: Regional Concentration: The Beijing-Tianjin-Hebei, Yangtze River Delta, and Guangdong clusters accounted for 78% of the national sales. Performance of Top-Tier Enterprises: Antelope Hydrogen Energy: Delivered and operated 100 hydrogen-powered container trucks for Jiaxing Port Authority; Farizon New Energy Commercial Vehicle: Successively delivered 1,000 Farizon Star Intelligence H9M units to Shanghai Shangqiao; Proton Motor: Signed an export intention agreement with an Australian partner for 20 hydrogen fuel cell heavy-duty trucks. IV. Challenges and Outlook: Existing Bottlenecks: The coverage rate of hydrogen refueling stations is still insufficient, particularly in second- and third-tier cities, which lack supporting hydrogen refueling stations. H2 Outlook: Policy: As the final year of the "14th Five-Year Plan" fuel cell subsidy policy, the uncertainty surrounding the continuity of policies in 2025 will, to some extent, affect corporate production plans. Some enterprises have adopted conservative strategies due to unclear expectations for new policies, with some automakers suspending or reducing their production plans. Taking Beijing as an example, the hydrogen vehicle purchase subsidy in 2025 has decreased by 50% compared to 2021, and the subsidy disbursement cycle has been extended to 18 months, exacerbating the cash flow pressure on vehicle manufacturers and significantly reducing their purchase willingness. Additionally, the demonstration city cluster policy is set to expire in September 2025, while new policies remain unclear, plunging the industry into a "policy vacuum," with enterprises generally postponing their expansion plans. Short-term Drivers: Policy Sprint and Peak Season Effect 1. Subsidy Sprint: 2025 marks the final year of the demonstration city cluster policy, with local governments needing to complete their targets by August (Beijing-Tianjin-Hebei) or December (Zhengzhou, Hebei). It is expected that orders will be concentrated in Q3-Q4. 2. Expansion of Highway Access Policies: Ten provinces nationwide (including Shandong and Shaanxi) have introduced policies for free highway access for hydrogen-powered vehicles. The relaxation of highway access will stimulate demand for logistics and heavy-duty trucks. 3. Seasonal Installation Peak: Historical data shows that June and Q4 are the peaks for production and sales, with a rebound expected after the trough in May. The following figure illustrates the completion status of pilot projects in various target cities. (The above information is sourced from public data and survey data compiled by relevant departments.) V. Conclusion: Short-term Pressure, Expected Bottoming Out and Rebound in H2 1. The decline in May reflects a combination of economic bottlenecks, a policy vacuum, and seasonal fluctuations, rather than a reversal of long-term trends. 2. Core variables in H2: The intensity of the subsidy sprint in city clusters, the progress of hydrogen refueling station commissioning, and the speed of green hydrogen cost reduction. 3. Key periods: If sales do not rebound in June, the probability of a conservative annual forecast (7,000 units) will increase. If policy coordination is strengthened, an optimistic target (15,000 units) remains achievable.

On June 11, the China Association of Automobile Manufacturers (CAAM) released the production and sales data of the automotive industry for May. The data showed that in May, China's automobile production and sales reached 2.649 million units and 2.686 million units respectively, increasing by 1.1% MoM and 3.7% MoM, and growing by 11.6% YoY and 11.2% YoY. From January to May, China's automobile production and sales reached 12.826 million units and 12.748 million units respectively, increasing by 12.7% YoY and 10.9% YoY. The production growth rate narrowed by 0.2 percentage points compared to the period from January to April, while the sales growth rate expanded by 0.1 percentage point.

The State Council Information Office will hold a press conference at 10:00 a.m. on Tuesday, June 10, 2025. Deputy Secretary General Xiao Weiming of the National Development and Reform Commission (NDRC), along with relevant officials from the Ministry of Education, the Ministry of Civil Affairs, the Ministry of Finance, the Ministry of Human Resources and Social Security, and the National Health Commission, will introduce policies on further safeguarding and improving people's livelihoods, and answer questions from journalists.

Today, the three major indices of Hong Kong stocks extended their gains. By the close, the Hang Seng Index rose 1.07% to close at 23,906.97 points; the Hang Seng Tech Index climbed 1.93% to close at 5,319.96 points; and the Hang Seng China Enterprises Index gained 1.26% to close at 8,684.73 points. Note: Performance of the Hang Seng Index Notably, the Hang Seng Index has risen for three consecutive days. The Hang Seng Tech Index has followed a similar trend over the same period. Today's Market In terms of market performance, individual stocks in the semiconductor and real estate sectors strengthened, while those in the pharmaceutical, tea beverage, and shipping sectors weakened. Semiconductor Stocks Lead the Market By the close, Hongguang Semiconductor (06908.HK), Hua Hong Semiconductor (01347.HK), and SMIC (00981.HK) rose 10.87%, 4.23%, and 4.19%, respectively. Note: Performance of semiconductor stocks In terms of news, the World Semiconductor Trade Statistics (WSTS) released a report stating that the global semiconductor market size will reach $700.9 billion in 2025, up 11.2% YoY. In terms of market segments, the growth in the semiconductor market this year will be led by increases in logic and memory: both markets are driven by sustained demand in areas such as AI, cloud infrastructure, and advanced consumer electronics, with double-digit YoY growth rates. Policies Continue to Stimulate Real Estate Stocks By the close, Midea Real Estate (03990.HK), China Resources Land (01109.HK), and China Overseas Land & Investment (00688.HK) rose 4.38%, 3.56%, and 1.69%, respectively. Note: Performance of real estate stocks China Index Academy stated in an article that the total bond financing of national real estate enterprises in May was 28.88 billion yuan, up 23.5% YoY. In terms of financing structure, corporate bond financing in the real estate sector was 11.17 billion yuan in May, up 5.8% YoY, accounting for 38.7%; ABS financing was 17.71 billion yuan, up 38.1% YoY, accounting for 61.3%. The average interest rate for bond financing was 2.35%, down 0.43 percentage points YoY and 0.41 percentage points MoM. China Galaxy Securities analyzed that the continuous optimization of the policy environment has driven the recovery of financing for real estate enterprises. The premium transactions of high-quality land plots in core cities indicate a restoration of market confidence, and there is significant room for valuation recovery for real estate enterprises with high-quality land reserves. Most Pharmaceutical Stocks Adjusted By the close, SinoMab BioScience (03681.HK), Harbour BioMed (02142.HK), and Giant Biogene Holding (02367.HK) fell 17.19%, 9.83%, and 8.70%, respectively. Note: Performance of pharmaceutical stocks In terms of news, this adjustment was mainly influenced by profit-taking. Taking SinoMab BioScience as an example, the stock has risen by more than 110% over the past four trading days. Soochow Securities has cautioned that after the rapid rise of the innovative drug sector, attention should be paid to the valuation match, and it is recommended to focus on enterprises with international BD capabilities and commercialization implementation. Tea beverage stocks retreat after hitting new highs By the close of trading, Gu Ming (01364.HK), Mixue Group (02097.HK), and Cha Baidao (02555.HK) fell by 7.97%, 7.72%, and 7.72%, respectively. Note: Performance of tea beverage stocks In terms of news, analysts from Everbright Securities International stated that the valuations of some consumer stocks have already factored in growth expectations, and it is necessary to pay attention to the validation of same-store sales data in Q2. It is recommended to differentiate and treat targets with the ability to continuously expand stores. Other new consumer stocks also weaken simultaneously Laopu Gold (06181.HK), Maogeping (01318.HK), and Blukoo (00325.HK), which are also new consumer stocks listed in Hong Kong, also experienced adjustments, falling by 9.05%, 6.67%, and 3.64%, respectively. Taking Laopu Gold as an example, the market is concerned about the liquidity pressure brought by the lifting of the 69.05 million share lock-up at the end of June. In addition, the stock has accumulated a gain of 212% year-to-date. Individual stock movements Dongfeng Motor's H-shares plummet over 14%; controlling shareholder clarifies no restructuring plans for now Dongfeng Motor Group (00489.HK) fell by 14.45% to close at HK$3.61. According to an announcement in the morning, the controlling shareholder stated that it is currently not involved in any business restructuring. Xindong Games surges over 8% during trading; "Etheria" international server launches today Xindong Games (02400.HK) rose by 8.25% to close at HK$40. In terms of news, the strategy turn-based RPG mobile game "Etheria" developed by Xindong Games will officially launch its international server on June 5. Kaiyuan Securities believes that following the impressive performances of "Muffin Adventure" and "Xindong Town," which were launched in 2024, the launch of "Etheria" may further drive Xindong Games' earnings growth. Citi previously pointed out that the company may have more catalysts in H2, namely the launch of "Etheria" in mid-year and the overseas version of "Xindong Town" in H2. JL MAG Rare-Earth's H-shares surge over 12%; China's rare earth export controls trigger sharp jump in overseas rare earth prices JL MAG Rare-Earth (06680.HK) rose by 12.13% to close at HK$18.86. In terms of news, affected by China's rare earth export controls, overseas medium-heavy rare earth prices jumped by 15% in a single week. Guotai Junan Securities expects that the widening price spread between domestic and overseas markets will drive profit improvements for rare earth permanent magnet enterprises, with enterprises possessing overseas channel advantages benefiting significantly.