Car Sales Expected to Resume Moment Increase by the End of Year

After the China Association of Automobile Manufacturers announced October production and sales data, today CITIC Securities said in a research report that due to stronger market demand, it is expected that vehicle sales in November and December will increase by 6-8% month-on-month, and this The end of the current domestic car sales decreased, year-on-year growth.

According to the data released by the China Association of Automobile Manufacturers on Tuesday, in October 2010, China's automobile production and sales reached 1,541,100 and 1.5,38,600, respectively, an increase of 22.50% and 25.47% year-on-year, respectively, but it was still slightly smaller on a month-on-month basis than in September. Fall back.

CITIC Securities believes that due to seasonal factors, the sales volume of automobiles in the third quarter decreased by 6.4% from the previous month. However, as terminal demand continues to be strong, it is expected that vehicle demand in November and December is still expected to increase by 6-8% from the previous month. At the same time, due to the steady increase in profitability of domestic mainstream auto makers in the third quarter, net profit fell by only 5.9%, which was lower than the year-on-year drop in sales. Therefore, CITIC Securities expects the profitability of auto companies in the future to continue to increase.

CITIC Securities believes that the valuation of A-share auto companies is at the low end of the market. Currently, the dynamic price-earnings ratio of the mainstream companies in the auto industry in 2011 is only 11-13 times. It is expected that competitive auto companies will achieve sales growth of more than 20% and profit growth of more than 30% next year. The reasonable valuation of mainstream companies should be at least 15-18 times that of 2011. Therefore, CITIC Securities currently maintains the automotive industry's “outperform” rating, and recommends focusing on high-end passenger cars and parts companies with strong profitability and low valuations.

Combined with the October production and sales data released by the China Association of Automobile Manufacturers, Orient Securities said in a related report that it sees a strong car segment.

Orient Securities believes that since the implementation of the energy-saving subsidies in August, the sales of small-displacement vehicles continued to increase. In October, the sales volume of models with 1.6L or less increased by 40.8% year-on-year, which was higher than the 27.4% year-on-year growth rate of narrow passenger vehicles. Due to the expiration of government procurement tax incentives for small-displacement vehicles and the continued introduction of energy-saving extension models, sales growth of small-displacement models in November and December will continue to be better than the overall growth rate of passenger vehicles.