Automotive industry: Large and medium-sized cars more like oil prices fall

Recently, crude oil prices have fallen sharply, which is a major plus for the automotive industry, whether it is to reduce manufacturing costs or stimulate car demand. Through sensitivity analysis, large and medium-sized passenger cars and heavy trucks in commercial vehicles benefit from the reduction in the manufacturing cost caused by the drop in oil prices. It is recommended to hold long-term leading companies in the large and medium-sized bus industry and heavy truck industry.

Judging from the mature automobile market in foreign countries, there are certain correlations between fluctuations in oil prices and car sales. As oil prices continue to rise and car sales show negative growth year-on-year, there is a negative correlation between the two. In the stock market, there has been a slight rebound in the automobile sector in the US recently. Although the rebound in the auto sector may be caused by multiple factors, not all of them are caused by the drop in oil prices, but at least it reflects the positive effect of falling oil prices on listed companies.

The correlation between oil prices in the developed countries and the auto industry is obvious, but the relationship between the two in developing countries is not very clear. As China's auto industry is still in its growth period, the impact of rising or falling oil prices on car sales is not very obvious. However, fluctuations in oil prices still have some impact on the auto industry. In the automotive stage of development, the rise and fall in oil prices will also restrain or stimulate sales. .

The Influence of Oil Price on the Value Chain of Automobile Industry

Oil prices will have an impact on the value chain of the automotive industry. On the one hand, oil is the raw material for intermediate products such as plastics, rubber, leather, and chemical fiber needed in the automobile manufacturing process. The rising or falling of oil prices will cause automobile manufacturers' manufacturing costs to increase or decrease. On the other hand, oil prices will directly affect the cost of automobile use. The price of oil will increase the cost of use and suppress the demand for cars. On the contrary, the drop in oil prices will stimulate demand for cars and thus affect the demand for cars.

The Impact of Oil Price on the Use Cost of Automobiles

Automotive products have always been the main source of consumption of crude oil, and changes in oil prices will directly affect the cost of using the car. When the international oil price was high in the early stage, the domestic retail oil price was gradually increased. Since March 2005, the price of oil has been adjusted for 6 times. Currently, the gasoline price of 93# gasoline in Beijing has reached 4.71 yuan, which has increased on the basis of March 2005. 38. 94%, although we believe that oil expenditures account for a small part of the cost of car use, rising oil prices have a direct impact on consumers’ cost of use and have curbed demand for cars. Some car consumers are sensitive to changes in oil prices. Delayed car consumption. The current international oil price correction, SASAC said that if the future price of oil still maintain the current price will consider lowering refined oil prices. We believe that if domestic retail oil prices fall, car demand will be effectively released, which in turn will stimulate auto consumption. The increase in car sales will ease the price decline, which in turn will help improve the profitability of the auto industry.

The Influence of Oil Price on Passenger Car Use Cost

Fluctuations in oil prices have a greater impact on the cost of passenger vehicles. We have made specific calculations of the changes in the use price of different models when oil prices rose in the early period. When the price of oil rises, small-displacement and economical cars will benefit the most and will save. The cost of vehicles; while the cost of vehicles with large displacement cars will increase. The specific calculations for different displacement cars are as follows: Table 2 lists the oil expenditures before and after the change of oil price under actual fuel consumption conditions for low-, medium-, and high-end vehicles with different displacements. Taking Excelle 1.6LX-MT as an example, the actual fuel consumption per 100 kilometers is 10.66 liters. Assuming that 30,000 kilometers will be driven annually, the new oil price will be approximately RMB 15062 for a one-year oil price of RMB 4.71 yuan after the latest holiday. Alto’s fuel expenses are approximately 57.09% for Excelle, 45.67% for Regal, and 43.92% for Audi. Conversely, if the price of oil falls, passenger cars will benefit, and the cost of economical, small-displacement cars will decrease, stimulating their sales, while the demand for large-displacement cars and SUVs will be released to some extent. .

The Impact of Oil Price on the Use Cost of Commercial Vehicles

In comparison, commercial vehicles belong to the means of production. Most of the commercial vehicle demands show strong indispensable features. The fluctuation of oil prices has little effect on their total amount, but it will have a structural impact.

We have made a specific analysis of the impact of oil prices on the use cost of different models when the price of oil rises. When the price of diesel is increased, the use cost of medium- and heavy-duty trucks and buses will increase significantly. Passenger and freight companies will also slow down the purchase of new vehicles. The sales of trucks have a certain impact, which will, to some extent, curb their demand for cars. Conversely, the use of medium-duty trucks and large and medium-sized passenger coaches will see a significant reduction in the price of oil, and the demand for passenger cars and trucks will also be released.

Conclusion: The drop in oil prices will lead to a certain degree of release of auto sales demand. Passenger cars and commercial vehicles will benefit from greater benefit from falling oil prices.

The Impact of Oil Price on Automobile Manufacturing Cost

The automotive industry is an industry that involves a very wide range of industries. Many raw materials used in the manufacture of automobiles, such as tires, plastics, and glass, use petroleum as raw materials, and changes in the price of crude oil will drive changes in the prices of these raw materials for industrial products. According to a calculation made by a chemical researcher at the Changjiang Securities Research Institute, the correlation coefficient between oil price and natural rubber is about 0.8, and the degree of correlation is relatively high. Although rubber prices are affected by their own supply and demand, the drop in oil prices will also be transmitted to rubber, which will also have a certain impact on the price of rubber. Recently, in the case of oil price correction, natural rubber prices have decreased significantly, and rubber price fluctuations will be transmitted to tire prices. , And then have a certain impact on the cost of car manufacturing.

Since the impact of oil prices on raw material prices is difficult to quantify, the proportion of tires, plastics, etc. in the cost of automobiles is also difficult to quantify precisely, and the proportion of plastics, etc., in the cost of automobiles is also relatively small. Therefore, when we analyze the impact of oil prices on the manufacturing costs of auto companies, Only consider the impact of tire price changes on the cost of auto companies.

Tires have different cost proportions in different models. We estimate that the proportion of tires in passenger cars is about 1-3%, and that of commercial vehicles is about 4-6% of the main operating costs. Based on our sensitivity analysis, we estimate that if the drop in oil prices causes the price of tires to drop by about 2%, the net profit of sedans such as Changan Automobile will increase by about 0.71%, while that of Yutong Bus and CNHTC in commercial vehicles. Net profit increased by 1.08% and 1.87% respectively. The change in tire prices has little effect on the profitability of sedans listed companies, and it has a slight impact on commercial vehicle companies. The drop in oil prices will help improve the profitability of heavy trucks and large passengers.

The price of oil is also related to automobile glass. The raw materials of glass original glass in auto glass are composed of heavy oil, soda ash and silica sand. The drop in oil price will lead to a drop in the price of heavy oil. We have done a sensitivity analysis on the impact of the drop in heavy oil prices on the profitability of Fuyao Glass. We conducted a sensitivity analysis on it and obtained the following results: If the prices of heavy oil, soda ash, and silica sand fell by 5% and 10% respectively, the company's EPS would increase by 2.06% and 4.71% respectively.

Oil price correction in the automotive industry investment strategy

We believe that the correction of oil prices from the use of cost and manufacturing cost analysis are conducive to the improvement of the profitability of the automotive industry, and the fourth quarter is the traditional peak season of automobile sales. The performance of automotive companies will increase in the fourth quarter. We believe that asset allocation can be adjusted appropriately. High car industry configuration weights.

The major investment strategies of the auto industry in the fourth quarter under the background of the oil price correction are as follows:

1. Long-term holding of leading companies in large and medium bus industry.

We believe that there will be sales opportunities in the domestic and international markets in the large and medium-sized bus industry for at least 3-5 years. Although the industry will not have explosive growth opportunities, it will maintain stable growth. Compared with heavy-duty trucks that are subject to price fluctuations and consumer demand, and have greater fluctuations in profitability, large- and medium-sized buses are an advantageous sub-sector in the automotive industry. The dominant companies in the industry are worth investing for a long time. The fourth quarter was the busy season for the passenger car industry. It maintained Yutong Bus (600066) and Shuguang (600303), and maintained a cautious recommendation rating of Golden Dragon Motor (600686).

2. Holding leading companies in the heavy truck industry.

Although we believe that the future competition landscape of the heavy truck industry will change, in the short term, China National Heavy Duty Truck Group is still the leading company for heavy trucks with a capacity of more than 15T; China National Heavy Duty Truck (000951) maintains its recommendation rating and maintains the cautious recommendation rating of Hunan Torch Motor (000549).

Dongfeng Motor (600006)'s main product, the Cummins engine, is related to heavy trucks. Due to this year's decline in Dongfeng's limited sales of medium and heavy trucks, which affected the sales of Cummins, Cummins’s export share this year is higher than in 2005. We expect the proportion of foreign sales to reach around 30%, taking into account In terms of export sales and sales volume improvement in the second half of the year, we maintain our forecast for engine sales in the previous report. It is expected that engine sales in 2006 will reach 96,500 units, which will increase by 12.21% year-on-year. The profitability of Zhengzhou Nissan increased significantly. The gross profit rate of SUVs and pickups increased from 18.16% in 2005 to 22.72% this year, an increase of 4.56%. It is expected that after the company communicates with the shareholders of tradable shares, the share reform plan will be better, and Dongfeng Motor’s recommendation rating will be maintained.

3. Actively focus on the band investment opportunities of car companies.

We believe that there are major reasons for the existence of band investment opportunities in the listed companies in the fourth quarter:

1) The sales figures of the major manufacturers in the latest September have performed well and sales will rebound in the fourth quarter. In August, saloon sales have rebounded significantly, up 21.04% month-on-month, and cumulative sales from January to August were 2,346,800 units, an increase of 39.68% year-on-year. In the third quarter, it was the off-season sales season. In the fourth quarter, saloon sales will show marked improvement.

2) In the context of the oil price correction, the demand for cars will be released to some extent. In the event of a correction in oil prices, the demand for car companies will be released, and the pressure on car manufacturing costs will also be eased.

3) The pre-sales companies generally saw relatively small gains and there was room for rebound.

4) Main concern companies: Changan Automobile (000625) and Shanghai Automotive (600104).

We believe that in the context of the oil price correction, the demand for cars will be released to a certain extent. In the third quarter, it will be the off-season sales season. In the fourth quarter, it will turn for the better. Car companies will generally see smaller increases. Under the condition of oil price correction, the demand for car companies will be released. The cost pressure will be eased. We believe that there are band investment opportunities for the car companies and maintain the recommended ratings of Changan Automobile (000625) and Shanghai Automotive (600104). In addition, FAW Car (000800) should also be given some attention. Its own brand Pentium sedan orders reached 7,500 units in the first month. If the sales trend can continue, we think the company also has investment opportunities.

4. Leading companies in the sub-sectors of spare parts industry are concerned about companies with international supporting potential.

We believe that under the steady growth of domestic vehicle demand in the future, the steady increase in vehicle sales demand and the significant cost advantage brought by spare parts companies will bring opportunities for the development of China's auto parts industry. Maintain Weifu Hi-Tech and Fuyao Glass's cautious recommendation rating; in addition, investors are recommended to have a certain market share in the segmented market, and due to the time required for internationalization, for the current international procurement, although there are fewer batches, it will have a large future. Parts companies with a lot of international supporting potential need to pay attention.