Investment analysts are focusing on potential winners in China’s car market following a 10-day auto show in Beijing that highlighted intense competition. The show saw overwhelming attendance, with foreign visitors such as Chinese brands’ overseas dealers and importers in attendance. Analysts anticipate that overseas markets could contribute significantly to the profits of leading producer BYD this year. Tesla, which receives more than a fifth of its sales from China, has not exhibited at the main auto show since 2021 but has made recent progress in overcoming challenges and gaining approval for its driver-assist software in China. Analysts note that the Chinese car market is oversaturated, leading to irrational competition as the industry transitions from internal combustion engines to battery electric vehicles.
After two days of restricted access, the Beijing auto show opened to the general public, with car companies competing to attract consumers through various experiences and attractions. More than 110 new car models debuted at the show, with top brands using the event as a marketing tool to showcase their products and engage with customers. Xiaomi’s founder Lei Jun attracted attention for promoting the company’s new electric sedan at the show, highlighting the importance of marketing in the industry. Nio and Leapmotor reported better-than-expected deliveries in April, with Nio shares seeing a significant increase since a mid-April low. The Chinese government’s trade-in policy aims to encourage purchases of new energy vehicles and fuel-powered cars, potentially boosting passenger vehicle sales by 1 million units this year.
Analysts are optimistic about Chinese car stocks, with Leapmotor, Geely, and BYD identified as top picks due to their potential to benefit from government stimulus. Jefferies’ analysts believe that the new trade-in policy could lead to a higher penetration of new energy vehicles in China. While Chinese automakers are gaining favor among analysts, foreign companies like Volkswagen are facing challenges in the Chinese market. VW management admitted to misjudging consumer demand and failing to recognize the emergence of a cost-competitive domestic Chinese industry aligned with consumer trends. The focus on Chinese automakers suggests that foreign companies are losing their market leadership in China.
The Beijing auto show showcased a variety of experiences and attractions to engage consumers, with top brands using the event as a platform to promote their products and engage with customers. Xiaomi’s founder Lei Jun garnered attention for promoting the company’s new electric sedan, highlighting the importance of marketing in the industry. Nio and Leapmotor reported strong deliveries in April, with Nio shares surging since a mid-April low. The Chinese government’s trade-in policy aims to boost sales of new energy vehicles and fuel-powered cars, potentially leading to a higher penetration of new energy vehicles in the Chinese market.
Overall, analysts are bullish on Chinese car stocks, particularly Leapmotor, Geely, and BYD, as potential beneficiaries of government stimulus. The trade-in policy could significantly impact passenger vehicle sales in China and lead to increased adoption of new energy vehicles. Despite challenges faced by foreign companies like Volkswagen, Chinese automakers are gaining favor among analysts due to their alignment with consumer trends and cost competitiveness in the market. The Beijing auto show served as a platform for top brands to showcase their products, engage with consumers, and gain traction in the competitive Chinese car market.
