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2026-09-25 12:19:42 Citi published a research report and said that it held a meeting with China Passenger Car Association (CPCA) Secretary-General Cui Dongshu, covering export tax rebates, EU tariffs, industry consolidation, and updates on Sep retail data. Citi cited Cui as saying that the cancellation of export tax rebates is expected to start with NEVs, with implementation spanning more than two years. The rebate rate may be reduced from 13% to 9%, and then to 5%. The first phase was assumed to run from around mid-2027 to the end of 2028, while the second phase may proceed faster and conclude by mid-2029. Formal policy announcements are more likely by end-2026 or early 2027, with tentative implementation from 1 Jul 2027. The policy is unlikely to apply to fuel passenger vehicles, commercial vehicles, or construction machinery. Regarding the EU's proposed 15% market share cap on Chinese NEVs, Cui believed the measure serves as negotiation leverage and would be difficult to enforce in practice. The EU's core objective is to encourage localization of components by Chinese automakers in Europe and support the local industrial base. China's BEV market share in the EU had already reached 21% in Jul 2026, vs 12% in 2025, and may rise to 25-30% in 2027. Chinese automakers still maintain clear pricing and product competitiveness advantages over local rivals and can absorb tariff costs through pricing adjustments. Cui said consolidation in China's domestic auto industry is accelerating. The two Toyota JVs with FAW and GAC could become examples of future consolidation, while differences between Huawei and SERES (09927.HK) may lead to a restructuring of the Harmony Intelligent Mobility Alliance (HIMA) model. Export-oriented leading automakers, including BYD, Geely, Chery, Changan and SAIC Motor, are in a relatively better position, while JV brands face risks of marginalization and smaller automakers are losing market share. He expected China's domestic passenger vehicle retail sales to grow 7% YoY to 19.93 million units in 2027. Updated passenger vehicle insurance retail data for 1-20 Sep showed passenger vehicle retail sales fell 22% YoY and rose 8% MoM. Cui estimated full-month retail sales at about 1.7 million units, down about 25% YoY and up about 10% MoM. NEV passenger vehicle retail sales fell 9% YoY and rose 14% MoM. By brand, BYD COMPANY (01211.HK) lifted 11% MoM, while LI AUTO-W (02015.HK) and XIAOMI-W (01810.HK) both grew 32% MoM. XPENG-W (09868.HK) lost 17% MoM, NIO-SW (09866.HK) added 1% MoM, and LEAPMOTOR (09863.HK) sagged 8% MoM. Cui said reducing reliance on a single battery supplier, namely CATL (03750.HK), is a structural trend among automakers, with companies introducing second and third battery suppliers. For example, new Xiaomi vehicle models use batteries from CALB (03931.HK) and SUNWODA (300207.SZ). Compared with BYD COMPANY, CATL's technological moat is relatively shallow, and the real barrier may lie in execution. However, CATL has already invested aggressively and retains first-mover and ecosystem advantages over other automakers. ~ AASTOCKS Financial News Website: www.aastocks.com | |