Guotai Junan: The automotive industry has entered a stable stage of development

1. Overview of the overall operation of the automobile industry in 2005

In 2005, the national automotive industry achieved stable development with cumulative production and sales of 5,707,700 units and 5,758,200 units, an increase of 12.56% and 13.54% year-on-year respectively. Among them, the production and sales of passenger cars were 3,930,700 and 3,971,100, respectively, an increase of 19.73% and 21.4% year-on-year; commercial trucks were sold 1.777 million and 1.8171 million, a slight drop of 0.6% and 0.75% respectively.

In 2005, the sedan (basic passenger car) was sold and produced 2,767,700 units and 2,787,400 units, an increase of 24.42% and 24.31% year-on-year; MPVs (multi-function passenger vehicles) were cumulatively sold and sold 155,100 units and 155,800 units, respectively. Increased by 30.42% and 42.76%; SUVs (Sports Vehicles) accumulatively produced 195,300 units and 196,400 units, an increase of 15.48% and 20.63% year-on-year; cumulative sales and sales of minivans (crossover passenger vehicles) totaled 812,600 and 83.15. Ten thousand vehicles, an increase of 5.47% and 9.87% year-on-year respectively; passenger cars (excluding passenger cars other than minivans) had a total production and sales of 176,800 and 178,600, which was a year-on-year decrease of 2.6% and 2.34%; and the cumulative sales of trucks were 1,162,400 and 116.34 respectively. Ten thousand vehicles, an increase of 4.26% and 3.79% year-on-year; cumulative sales of semitrailer tractors totaled 56,500 vehicles and 56,800 vehicles, a decrease of 41.67% and 42.76% year-on-year; cumulative production and sales of passenger car chassis (non-integrated passenger vehicles) were 90,200 and 9.05 respectively. Ten thousand units were basically the same as the same period of last year. The chassis of the trucks (incomplete trucks for trucks) had a total production volume of 291,000 vehicles and 297,700 vehicles, which was a year-on-year decrease of 4.34% and 2.98% respectively.

Among the subdivided models, the growth of passenger vehicles is still more obvious, among which the growth rate of cars and MPVs is higher; in commercial vehicles, the increase of trucks has slowed down significantly, and passenger cars have declined slightly due to the decline of light passenger cars.

Sales and sales of cars have maintained rapid growth, with economic cars being more active. Although the mindset of the consumer-money-to-buy purchase in 2005 has not yet been effectively alleviated, and the high fuel prices have also led to further increase in the cost of use of the sedan, but along with the country's overall economic development, the improvement of personal income levels, coupled with corporate marketing The adjustment of strategy still ensures that the basis for the growth of car sales is growing. Cars, especially those with low fuel consumption and low pollution, are recognized by the market and become the main force driving the growth of the entire automobile industry. Of course, in the face of the fierce market competition of economical cars, the profitability of related companies has not increased along with the growth of production and sales, and the “small profits but quick turnover” feature of economical cars is even more pronounced.

MPV enters a period of rapid development, and domestic brands occupy an absolutely dominant position. With the further segmentation of the automotive market, MPV has also obtained good opportunities for development. The major companies have continuously enriched and improved the diversified functions of their products and effective marketing strategies, making MPV occupy the traditional 5m or less passenger cars. The market has an advantage in competition and continues to maintain rapid growth.

The SUV market is constrained by high oil prices, the situation is becoming increasingly severe, and development has begun to enter the adjustment period. The unique high fuel consumption characteristic of SUVs makes its use cost higher than that of other passenger car types, and therefore it has obvious disadvantages as an urban vehicle. In the past, there were quite a number of companies involved in the "curve" of passenger vehicle manufacturing. They had developed and produced so-called "economical" SUVs. As a result, competition in the market was intensified, and their development prospects in the face of high oil prices were naturally not optimistic. To this end, related companies have begun to return to the SUV's middle-to-high-end development path, and through the upgrading of product quality and technical content to ensure the continued stability of development.

Cross-country passenger cars (micro-passengers) are fiercely competitive but their development remains stable. In the field of this model, the pattern of Chang'an, Wuling, and the Aviation Department (Hafei, Changhe) has continued for many years. It is worth mentioning that, in 2005, SAIC-GM-Wuling was able to surpass Chang'an Automobile and become the first in the field with its technological advantages and marketing advantages.

The increase in the sales of trucks has obviously slowed down, with heavy trucks being the major drag. Due to the strengthening of the state’s macroeconomic control, the rise in the price of raw materials such as steel and the lack of actual excessive governance, heavy-duty trucks have experienced negative growth for the first time since 1999. However, despite the apparent slowdown in the growth of trucks, the leading companies in the industry have remained relatively strong and the level of concentration remains high. Due to the declining demand for heavy-duty trucks, semi-trailer tractors also showed significant adjustments, with production and sales falling by more than 40% year-on-year.

The production and sales of passenger cars was dragged down by the weak development of light passenger vehicles and continued to be at a low speed while large and medium-sized passenger vehicles maintained a sustained and stable growth. As the development of homogenization of minibuses has not yet been effectively mitigated in 2005, the overall pace of technological upgrading is not fast, and the substitution of MPVs has resulted in the continued decline of light buses. At the same time, due to the development of urban public transport, further improvement of urban and rural road traffic, and the rapid rise of tourism, large and medium-sized passenger vehicles continue to maintain a good momentum of growth, and the degree of concentration continues to maintain a high level.

Although in 2005, faced with many unfavorable factors such as poor market demand, increased manufacturing costs, and reduced profitability, key automakers are still adept and rationally adopting appropriate countermeasures to actively promote a sound and effective marketing strategy. To ensure the continuous and stable development. Overall, the differentiation between enterprises is further aggravated.

In terms of production concentration, according to statistics, the top ten companies in production and sales rank are FAW, SAIC, Dongfeng, Chang'an, BAIC, GAC, Hafei, Chery, JAC and Geely. Their concentration is as high as 83.71%, and the top five are in production and sales. The concentration of companies reached 67%.

2. Prospects for the Development of the Automotive Industry in 2006

Looking forward to 2006, after experiencing the ups and downs of these years, in the first year of the 11th Five-Year Plan, there is reason to believe that China’s auto industry will continue to maintain a rational, steady and mature development. The pillar position and role in the national economy will be more stable and manifest. It is estimated that the annual production and sales of automobiles will reach 630-6.5 million units in 2006, an increase of 10-13% year-on-year.

3, industry company investment rating

Industry Rating: Although it is expected that the auto industry will still achieve a certain degree of growth in production and sales in 2006, due to high raw material prices for steel and nonferrous metals, energy power often becomes a “bottleneck” during peak seasons, and new models are added ( Including revising models, the marketing conflicts caused by the continuous launch of the models, so the moderate growth in production and sales and the company's profitability can not be synchronized with the growth of production and sales growth pattern will continue. Especially for passenger vehicles, the continuous launch of new models and the further downward movement of the mid-to-high-end models will continue to squeeze the profitability of low-end models.

Therefore, after comprehensive consideration of various influencing factors, the investment rating of “neutral” for the transportation equipment and accessories industry and related fine-grained industries will remain unchanged.

Company Rating: Based on the judgment that the development of automotive companies in 2006 was further aggravated, after comprehensively considering various factors including stock reform, Jiangling Motors (000550), FAW Cars (000800), FAW Xiali (000927) , Yutong Bus (600066), G SAIC (600104), G Jiangjiang (600418) and Golden Dragon Motor (600686) and other leading companies in the industry and market segments, and the companies that are about to implement share reform.

4. List of major business operations of subdivision models

From related statistics, it can be seen that for the car manufacturing industry, small-displacement, economical car manufacturers have a substantial increase in production and sales in 2005, and some even double, but the company’s profit has not increased simultaneously. Some companies are still unable to escape the fate of loss. In contrast, companies with a rich product structure and considerable scale have a clear overall advantage.

In terms of profit concentration, the top ten profit-making auto makers accounted for 37.85% of the total auto industry's profitability, and the profit of the top five auto makers accounted for 28.09% of the auto industry's total profitability.