Auto Industry: Better Brand Development with Independent Brand Foundation

This report reviews our investment strategy for the automotive industry in 2007 and makes judgments on the development of the automotive industry in 2008 and in the future. The development of self-owned brands will determine the development prospects of Chinese local autos, and the overall strength will determine the living space of the company. Industry consolidation will continue through the entire development process, and the “recommendation” of the industry will be maintained under the circumstance that the fundamental factors affecting auto consumption will not change. Investment rating.

Car sales continued to grow in 2007. In January-November 2007, automobile sales were 7.95 million, of which, the year-on-year increase was 24%, the SUV increased by 55.6%, the heavy truck increased by 46%, and the big passengers increased by 24.5%. Annual sales will exceed 8.7 million units, an increase of more than 22% year-on-year.

The steady growth trend in 2008 remained unchanged. The fundamental factor affecting auto consumption is that the rapid economic growth trend has not changed, and the auto market will continue to maintain stable growth in 2008. The pattern of consumption in the passenger vehicle market is clearly in the medium-to-high-level trend, and the profitability of the industry continues to increase. It is expected that the total sales volume in 2008 will exceed the 10 million mark, which represents a year-on-year growth of more than 20%.

The development of independent brands has a good foundation. The huge window of growth in the domestic auto market has brought about a long development window, which has brought about development time, a wide product price gap, and a wide distribution of product lines. This has brought about development space, a good industrial foundation, a relatively complete spare parts supply system, and the sharing of global development resources. Automobile companies have a good foundation for developing their own brands.

Investment strategy: Enterprises with more comprehensive strength have greater development space in line with national industrial policies and the laws of large-scale and centralized industries; pay attention to investment opportunities brought about by industry or enterprise integration, and the overall listing of FAW Group will change from 2007 to 2008. The reality of the year.

Company selection: We continue to maintain our strong investment rating for Shanghai Auto (600104). FAW Group's overall listing is difficult to bypass FAW Car (000800), and FAW Car's own performance will also be improved, maintaining a strong recommendation -A's investment rating; FAW Xiali (000927) is most likely to be absorbed under the overall listing expectation of FAW Group. Consolidate and maintain the recommended-A investment rating. Jiangling Motors (000550) has a stable operation, rich cash flow, long-term investment value, and maintains the investment rating of Recommendation-A.

I. Review of investment strategy in 2007 and outlook for 2008

Comprehensive strength determines the company's development prospects

Comprehensive strength determines the development of the company is the theme of our investment in the automotive industry in 2007

Comprehensive strength is an important basis for judging whether a company in the automotive industry has a significant investment value. According to the capital-intensive and technology-intensive characteristics of the sedan industry, we have divided the comprehensive strength of passenger vehicle companies into four major elements: the full accumulation of funds, the storage of technical products, manufacturing conditions, and marketing capabilities, which fully reflect the company’s The ability to compete. First of all, under the obvious trend of consumption of automobiles, especially cars, to mid-to-high-end products, investment demand has increased, which requires the company to have better capital accumulation; secondly, whether the reserve of medium and advanced products and technologies is sufficient determines the competition of the company's products. Capability; In addition, the quality of the company's products is determined by the perfection of manufacturing technology and component supply systems. Finally, the characteristics of consumer goods, especially passenger cars, are determined by the poor marketing capabilities of the company.

In 2007, we successfully recommended Shanghai Automotive (600104) and FAW Car (000800)

Based on the investment concept of comprehensive strength comparison, our highly recommended portfolio in 2007 includes Shanghai Automotive and FAW Car. It is the only company in the industry, and the highest increase in the share price of the two companies is among the top two companies in the auto industry. Among them, the highest increase of Shanghai Auto was as high as 303%, and the highest increase of FAW sedan was as high as 517%. Among them, our position for Shanghai Automotive is “the best internationalized local company”, and it is the typical representative of comprehensive strength that determines the future development of the company; positioning for FAW Car is from “China National Football Team” (having better value of improvement). To the transformation of “national team looking forward to integration”, excavation of corporate value is basically divided into three phases: 1) Undervaluation of corporate value; 2) Expectation of overall listing of FAW Group; 3) Analysis of the overall listing value of FAW Group and other three major stages .

The automotive industry is still worth the wait in 2008

According to our observations, the key factors that determine the positive trend of car consumption have not been changed. In 2008, the auto industry will continue to maintain a stable growth trend. Under the more ideal economic development, this trend will continue for at least 5-7 years. . In the actual situation of large market space and large differences in consumption levels, the development of self-owned brands is worth looking forward to. Excellent car companies still have high investment value, and it is the comprehensive strength of the company that determines all this. In addition, internal integration and industry integration are major investment opportunities.

In the following chapters, we will analyze the status quo of China's auto industry development, industry stage and development prospects, industry consumption characteristics and changing trends, the development environment and advantages of independent brands, industry profitability and change trends. According to our mature investment concept, we have selected companies with higher investment value in 2008 and made specific value analysis.

Second, in 2007 the car production and sales booming

From January to November 2007, the production and sales are in good condition

The stable and rapid growth of the industry remains unchanged

In 2007, the auto industry continued its rapid and steady growth in the second half of 2006 under the unfavorable conditions such as the continuous rise in refined oil prices and the continuous decline in product prices. It is estimated that the annual sales of automobiles in 2007 will exceed 8.7 million, which is higher than our expected 8.4 million at the beginning of the year.

In January-November 2007, automobile production and sales amounted to 806/795 million units, an increase of 22.25% or 23.19% year-on-year, of which passenger car production and sales were 576/566 million, an increase of 21.64%/22.82% year-on-year. Compared with the monthly production and sales figures for November, the year-on-year growth rate has declined from October, and considering the surge in production and sales data in the second half of 2006, the production and sales in November still maintained a relatively reasonable level of growth, and the industry’s steady growth trend. It is difficult to make fundamental changes in the short term. From January to November, the production and sales of passenger cars reached 576/566 million, of which 433/424 million cars were produced and sold, which was a year-on-year increase of 23.36%/24.32%. MPV production and sales were 20.42/20.4 million, an increase of 17%/21% year-on-year. SUVs The production and sales volume reached 32.2/31.9 thousand units, an increase of 56%/55.6% year-on-year, and the production of cross-type passenger vehicles was 90/90,000 units, an increase of 6.93%/8.85% year-on-year.

Sales and sales volume of commercial vehicles were 230/229 million, an increase of 23.83%/24.12% year-on-year, of which truck sales were 1.81 million, an increase of 20.72% year-on-year, and passenger car sales were 312,000, an increase of 19.8% year-on-year.

In 2007, sedan sales volume is expected to reach 4.76 million, accounting for 55% of vehicle sales, which represents a year-on-year growth of 24.3%. Sedan consumption is still the mainstay of auto consumption. Compared with mature markets in the world, it still has a large space for improvement. In the passenger vehicle market, the fastest growing market for SUV products is total sales of 360,000 vehicles, an increase of 50% year-on-year. In the truck market, benefiting from the rapid growth of fixed investment growth, toll collection and product upgrading, the heavy-duty truck market growth rate of 36.4% exceeds the growth rate of the truck industry by 18.5%. Large and medium-sized passengers still maintain steady growth. The annual sales volume is expected to reach 113,500 units, an increase of 17.9% year-on-year.

Corporate profit growth exceeds industry sales growth

From January to October 2007, the economic indicators of the key enterprises in the automotive industry performed well, mainly reflecting the stable increase in the gross profit margin of the industry. Under the conditions of falling product prices, the total profit of enterprises increased by more than the increase in the sales of the automobile industry, and the financial expenses dropped drastically, and the administrative expenses decreased. Etc.; while the increase in sales expenses beyond the sales revenue of the industry means that the industry's competition is still fierce.

We believe that the current company's profitability is mainly caused by the following points:

1) Improvement of capacity utilization rate;

2) Transfer of consumption structure to high-level products;

3) The appreciation of the renminbi led to a relative decrease in the cost of major imported raw materials;

4) Effective transfer of costs to the midstream and downstream;

5) Investment behavior of some companies.

Among the above factors, we believe that the change in the product consumption structure is the main reason for the sharp increase in the profit of key enterprises in the industry, and this trend will be effectively continued. With the appreciation of the renminbi and the continued decline in product prices, the growth of industry profits will still be effectively guaranteed.

Third, the status of the passenger car industry

Product prices will continue to decline, and gradually differentiate the industry companies

The market lacks sufficient understanding of the downward adjustment of product prices. The price decline of domestic passenger cars in 2007 was basically the same as in 2006. Under the situation where the product structure tends to medium-to-high-end products, there is still room for price reduction. We judge the use of passenger cars in 2008 accordingly. The decline in vehicle prices may exceed the average level in 2007, but it will have limited impact on the profitability of the entire industry. In 2008, the growth rate of profits will still exceed the growth of industry sales and sales revenue.

The active factors that drive down the price of products mainly include:

1) The profitability of mid-to-high-end products is high, and there is room for price reduction.

2) The increase in effective capacity utilization will dilute the firm's fixed costs;

3) The economic benefits resulting from increased capacity utilization are reflected not only in vehicle companies but also in the operation of parts supply companies.

4) In the case of a renminbi appreciation, the cost of purchasing key components has declined;

5) The further increase in the localization rate of new products of joint venture brands; the increase in market competition pressure and the expansion of market share are the passive factors for the price reduction of enterprises. However, our understanding is that, under normal circumstances, most of the time for companies to substantially adjust prices is at the same time as the launch of new products. Although the price of old products has fallen sharply, because old products basically belong to products that have been phased out (style and configuration appear to be relatively backward), their product sales are limited after price reduction; by improving the design, increasing the allocation, and increasing the localization rate, etc. New products will still maintain a high level of profitability.

The most impressive thing about the auto market is that price cuts and then price cuts. What needs to be known is that price cuts are not floods and beasts, but effective marketing. The decline in the price of old products under the replacement of old and new products has limited impact on the profitability of companies. This situation is basically similar to that of the mobile phone industry. A better company will always set appropriate products in each price range, but what is usually heard is the continuous decline in the price of its products. We believe that the price reduction of passenger car products is similar to this, but it is only a normal manifestation of technological improvement and cost reduction. A simple understanding of the declining prices of passenger car products will inevitably lead to a weakening of corporate profitability. Otherwise, considering the reduction in the price of passenger car products since 2002, most companies should be loss-making or failing. However, this is actually the case. Did not happen.

Product price cut will differentiate industry companies

The consumption of passenger cars has been changed from a single price determinant to a variety of factors. With the increase in the proportion of secondary purchases and the increasing awareness of cars, the factors affecting the purchase of cars have gradually expanded to comfort, safety, In terms of controllability and other aspects, simple price cuts cannot constitute a key factor that affects car sales. Therefore, the overall decline in product prices will be conducive to the overall strength of a strong, strong accumulation of funds, has a relatively high product quality, marketing services system is relatively perfect vehicle company, and has always been the price of war as the main marketing tools in the low-end The brand will be in a very passive situation, mainly reflected in two aspects, one is the continued decline in corporate profits; the second is the increase in sales of mid-to-high-end products led to shrinking market share. Under the general trend of declining product prices, the company's differentiation will gradually be aggravated, and the company’s development will be stronger and stronger.

The profit thickening effect is obvious under the adjustment of product structure

Increased proportion of mid-to-high-end products to ensure industry profitability

With the increase in residents' spending power and deeper understanding of passenger cars, the trend of shifting the product sales structure to mid-to-high-end products cannot be avoided. According to our statistics, during January-November 2007, the sales volume of 15-25 million product price ranges increased to 23.7%, which was 4.3 points higher than the whole year of 2006, and sales volume accounted for more than 250,000 yuan. It also increased 0.8 percentage points. The gross profit rate of medium-to-high-level and senior products is relatively high, with the average level exceeding 22%. The increase in its proportion also effectively explains why the gross profit margin has maintained a stable growth under the circumstances that product prices have declined in 2007. We believe that the proportion of middle-to-high-end products will continue to increase, effectively ensuring the overall profitability of the industry.

Increase in absolute sales of middle and senior products to increase profitability in the industry

According to our statistics, from January to November 2007, the sales volume of more than RMB 150,000 products reached 978,000 units, and it is expected to reach 1.11 million units throughout the year, which represents a year-on-year increase of 37% and a net sales growth of nearly 300,000 units. Even with a net profit of 20,000 yuan, the net profit will increase by 6 billion yuan. It is expected that the sales growth of this price range in 2008 will still be no less than 35%; in 2007, the sales growth of 10-15 million yuan will be expected to increase. 44%, a net increase of 325,000 vehicles, calculated on the basis of a net profit of RMB 0.6 million per vehicle, the net profit of this product will increase by 1.95 billion yuan; the sales growth of this product in this interval is expected to be no less than 40% in 2008. . The increase in the absolute sales volume of mid-range and high-level products directly improves the profitability of the industry.

From the comparison of product sales structure with 2006, it can be clearly seen that the sales volume of products under 50,000 yuan, which are basically at a loss, has a declining trend, and the profitability level is generally only 5-10 million. Therefore, under the steady growth of sales volume in the industry, the absolute increase in the sales volume of mid- to high-level products has significantly increased the overall profitability of the industry, and we believe that this trend of car consumption will continue to continue in 2008. It is an inevitable event that the industry's profitability exceeds sales growth and sales revenue growth levels.

Consumer trends determine the profitability of the company's mid- to high-level products

In 2008, it is destined to compete in the mid-to-high-end car market. The expansion of the mid-to-high-end product market is the trend of the car consumer market. Therefore, the reserve and competitiveness of mid-to-high-end products will determine the company's development prospects and profitability. From January to November of 2007, the sales of Toyota Camry, Honda Accord, and Shanghai Volkswagen Passat are located in the first group. The Nissan Sylphy, Tianmu, FAW Car Ma 6, and Changan Ford Mazda Mengdi have sales in the second group. . Among the domestic brands, only two models, the FAW Car Pentium and the Shanghai Auto Roewe, occupy a seat in the mid-to-high-end car market.

Considering the development of independent brands, Shanghai Automotive and FAW Cars are still the best investment targets, and the two companies with thicker foundations represent the highest level of competitiveness of domestic independent brands.

Fourth, the steady growth of the passenger car market will remain unchanged

Rapid growth of GDP is a major factor in the growth of car sales

In recent years, domestic GDP growth has remained above 10%. In 2007, the growth rate of domestic GDP reached 11.7%. The domestic economy is still in an upward cycle. GDP will maintain a relatively fast and steady growth rate in the next few years. It is expected that the growth rate in 2008 will still be as high as 10.6%.

The rapid growth of GDP is the fundamental factor driving the sharp rise in domestic auto consumption. The rapid growth of GDP affects the domestic automobile consumption market in many ways.

1) Increased residents' purchasing power, accelerating the process of car family-making

2) Increase in fixed investment assets, driving demand for commercial vehicles

3) The upgrading of urban passenger cars, the construction of new rural areas, and the gradual improvement of road network effects have boosted the growth of the passenger car market.

4) Development of export markets, gradually expanding the scope and influence of domestic commercial vehicle market

The main factors driving the consumption of passenger cars have not changed

Factors that have contributed to the stable and rapid development of the passenger vehicle industry include the following: The number of urban residents with relatively large numbers of vehicles with thousands of people is still low, the rapid increase in the per capita disposable income of towns and cities, and the gradual improvement of transportation networks (indicated by the increase in the number of road miles). . The continuous decline in car credits and product prices has promoted the rapid development of the passenger vehicle industry.

1) The urban population is an important basis for determining the final capacity of automobiles, and the low number of vehicles determines the huge space for the domestic automobile consumption market.

2) The per capita disposable income of cities and towns directly determines the size of purchasing power, determines the increase in consumption level and car consumption, and is a key driver of the auto market;

3) The transportation network is a restrictive factor that determines the consumption of automobiles. It is manifested by the increase in the number of roads, the gradual formation of road network effects, and the release of traffic pressure.

Low vehicle ownership and huge market space

Urbanization is the key factor in determining the capacity of the passenger vehicle market.

In 2006, the total population of the country was 1.31 billion, of which the urban population was 560 million. It is still increasing at a rate of about 2-3% each year, which means that the newly added urban population is close to 20 million. The process of population urbanization will, to a certain extent, lead to automobile consumption. First, it will increase the sales of private passenger vehicles. In addition, the process of urbanization will also bring about the growth of the bus passenger car market and the urban logistics market.

The automobile market in the United States and Japan is already quite mature. In 2005, the number of passengers in thousands of passenger cars in the two countries was 458 vehicles and 447 vehicles respectively. The two different types of market final value have a good reference for the final capacity of the domestic market. value. In 2006, the number of passengers in domestic passenger cars was 20, even though it was calculated according to the urban population, it was only 45 vehicles. This shows that China's passenger car market has a good space for development. In 2007, the domestic automobile consumption is expected to exceed 6.35 million vehicles. Without considering the renewal of vehicle ownership, the number of newly added thousand people is only 4.88, which is a cumulative total of 24.81 vehicles. According to the calculation of urban population, the cumulative increase to With 56.4 vehicles, the inventory base remains low.

Rapid increase of disposable income of urban residents to speed up the process of car family

The rapid growth of GDP has led to a sharp increase in the disposable income of domestic urban residents. Since 2001, the per capita disposable income of urban residents has basically maintained a growth rate of more than double digits. After breaking through 1,000 US dollars in 2002, the process of domesticizing passenger cars has been accelerated. In 2006, the per-capita disposable income of urban residents increased by 12.07% year-on-year. In June 2007, the per capita disposable income rose to an average of 7,052 yuan, a year-on-year increase of 18%.

The increase in disposable income of urban residents has implications for household car consumption:

1) The increase in residents' spending power will directly lead to an increase in the overall sales volume of passenger vehicles; 2) The increase in household consumption capacity will directly lead to the adjustment of the consumption structure of passenger vehicles, that is, the gradual increase in the proportion of mid- to high-end product sales and the mid- to low-end products. The proportion continued to decline.

Passenger car industry is in a period of rapid and steady growth

1) The spending power is already available

The Japanese and South Korean car markets started in the 1960s and 1980s respectively. Within the next decade, the growth rate of car sales was above double digits. In Korea, for example, South Korea’s GDP per capita in 1986 was US$2,618, which was US$10,839 in 1996, an increase of 4.16 times. Its sedan ownership increased from 16.1 to 151.4, an increase of 9.4 times, and the compound growth rate exceeded 20%. China’s per capita GDP in 2006 was US$2,126, which was comparable to that of South Korea in 1985. The auto consumption capacity is already in place, and the age of cars entering the family has arrived.

2) There is an accelerating trend

Taking the history of the development of the US automobile market as an example, the occupancy of 100 households in urban areas has taken 7 years from 0-10%, and the process from 10% to 50% only took about 7 years. At present, the number of cars owned by 100 urban residents in China has exceeded 6%, a trend of breakthrough to 10%. The development of China's auto market is still in the early stage of development, and the trend is good.

3) Fast and stable growth window is longer

China's passenger vehicle market is still in a period of rapid and steady growth. Considering the fact that China is a vast country and the imbalanced economic development between regions, the driving role of consumption in big cities is gradually weakened, and the Chinese auto industry, especially the passenger vehicle market, has grown rapidly and steadily. The window will exceed Japan and South Korea.

V. Passenger Vehicle Market Competition

The rapid growth of the domestic market and the stage of global competition are the current status of competition in the domestic passenger car market. Although the domestic passenger car market is huge, the competition is very fierce. It is difficult to provide domestic independent brands with time to complete better capital accumulation. The development of enterprises will inevitably continue the laws of the strong and permanent.

The strong development of enterprises in the sub-sector of the car

In January-November 2007, the top ten domestically-owned car sales companies were FAW-Volkswagen, Shanghai Volkswagen, Shanghai GM, Chery, FAW Toyota, Dongfeng Nissan, Guangzhou Honda, Geely Automobile, Changan Ford and Shenlong Auto. The total sales of the top ten automobile companies totaled 2.76 million, accounting for 65% of the total sales of cars. Although the industry competition is still fierce and there are new entrants, the market share of big companies has grown slightly in the light of changes in the distribution of sales in recent years. The development trend of related companies in the sub-sector of the auto industry is still strong. Strong. The main reason is that higher-power companies always have more product reserves, relatively large investments, stronger market development capabilities, and stronger profitability, ensuring that they will remain in a strong position during the fierce competition. .

Self-owned brand needs to be improved, there is no obvious national preference for car consumption

The self-owned brand products urgently need to be improved. The market share of self-owned brands has gradually increased since 2005. In January-November 2007, the market share reached 27%. However, self-owned brand products are mostly low-end products, still living in the gap, and profitability is relatively weak (most profitability of most models of joint venture brands exceeds 5 digits, while the majority of self-owned brands are only 3 digits), and it is difficult to guarantee continuous High-quality development investment. In 2008, there will be more joint-venture brands launched in the low-end market (such as the Mazda2 and Toyota Arris, etc.), continue to aggravate the competitive pressure in this segment of the market, and more test the majority of independent brands based on low-end products. With regard to the survivability of enterprises, it is expected that in 2008, the market share of self-owned domestic brands will decline.

Domestic car consumption has no obvious national preferences. From the analysis of the current domestic market share of sedan sales, the overall domestic car consumption market has no obvious national preference. Japanese cars Toyota and Honda have seen rapid sales growth in recent years, and their market share has gradually expanded, mainly based on Toyota's late start-up in China. At present, both companies have put their main models in the Chinese market. Under the premise that the market share of Korean cars continues to decline, their market share still has some room for growth. The German cars have grown rapidly under the rapid growth of Volkswagen in 2007. The share has also increased somewhat in comparison with 2006; the market share of US-based cars is basically the same, and it is expected that in 2008 Shanghai General Motors Corp. will experience a slight increase after experiencing a 2007 sales system adjustment.

MPV market competition is relatively stable

In 2007, the growth of the MPV market was relatively slow. After the change of government in 2008, it may bring growth beyond 2007.

The domestic MPV market competition pattern is relatively stable. In 2007, it continued the development of the previous two years. Shanghai GM, Guangzhou Honda and Jianghuai Automobile still ranked the top three in the industry. The three companies took the leading position in the MPV high, medium and low subdivided sectors with their products GL8, Odyssey and Ruifeng, respectively. From January to November of 2007, the sales volume of the three major products was 3.74, 4.05, and 37,000, respectively. The products ranked in the 4-5th place were Dongfeng popular and Jinbei Glass, followed by the top five companies in 2007. From January to November, the total sales volume reached 142,000, accounting for nearly 70% of the domestic MPV market, and the market concentration is relatively high.

In 2008, only a few products of this type were put into the domestic market. It is expected that the balance of the MPV market will be difficult to break in the short term. The three types of products will still bring more profits and abundant cash flow to the three companies.

SUV growth rate is still fast in 2008 and competition is intensifying

SUV sales in January-November 2007 increased by 55.56% year-on-year, mainly due to the rapid growth of the city's sports multi-purpose passenger vehicle market. The SUV market is expected to maintain rapid growth in 2008. From January to November, Great Wall Motors, Chery Automobile, Dongfeng Honda, Beijing Hyundai Motor and Changfeng Motor took the top five positions in the segment with 5.08, 4.72, 4.06, 4.04, and 22,700 vehicles respectively, accounting for 63.23% of the total sales volume. From the single month sales data in November, the proportion of CR5 lags behind the cumulative proportion of 59.4%, which means that with the rapid growth of the market, more new products will be launched. In 2008, the competition in this market segment will be even stronger. fierce.

Crossover Passenger Vehicle - SAIC-GM-Wuling Continues to Increase Market Share

The growth of the crossover passenger vehicle market is relatively slow, and SAIC-GM-Wuling’s market share is close to 50%, which is an absolute leading level. In January-November 2007, the market segments increased by 8.85% year-on-year, and 13 production and sales companies were involved. Among them, nine negative growth cases occurred. Of the four companies that achieved growth, only three had growth rates that exceeded the industry growth rate.

The growth rate of GM Wuling is as high as 24.75%, the growth rate of Dongfeng Motor is 24.26%, that of Changan Automobile (Chongqing) is 11.98%, and that of Nanjing Chang'an is only 5.47%. The industry concentration is further increased. Under the limited industry growth situation, SAIC-GM-Wuling continues to erode its market share. In the case of sufficient profitability, SAIC-GM-Milling will completely smash unprofitable companies and continue to favor SAIC-GM-Wuling in 2008. Crossover passenger car market performance.

Sixth, the development of self-owned brand foundation, comprehensive strength determines the future of the company

Develop a self-owned brand with a certain foundation

At present, apart from a few domestic self-owned brands, most of them are low-end and mid-to-end products. The relatively weak profitability has also affected the input of these companies in developing independent products. The low brand awareness is the main predicament faced by domestic self-owned brands. How to increase brand value is a problem that domestic brands must solve to develop their own brands.

Judging from the current manufacturing experience of the major economic powers, the United States, Germany, and Japan, the automotive industry as a pillar industry for the development of the national economy is an important reason for supporting countries from development to development. In particular, the development of the passenger vehicle industry not only stimulates domestic continuous demand, but also promotes the long-term sustainable development of the national industrial base. From the perspective of the development status of China's manufacturing industry, the development of self-owned brand passenger vehicles has greater advantages, mainly including: China's auto market has a relatively large capacity, low inventory, has just entered the family car industry, and the existing global resources sharing conditions. Relatively mature domestic industrial systems and foundations and the orientation of national industrial policies at this stage.

1) Unbalanced economic development leads to growth opportunities for independent brands

The passenger car market has a huge space. Domestic economic development is not balanced. The differences in consumption between first-tier cities and the second and third-tier cities and the objective existence of the dual urban-rural economy have resulted in greater consumption of passenger vehicles in the next 3-5 years. The difference is manifested in the simultaneous existence of various grades of product consumption in the domestic passenger car market. The existence of a low-end product market has brought better development opportunities to independent brands with relatively low starting points. Although the current market positioning of self-owned brand passenger vehicles is relatively low, the development in recent years is obvious to all. It has gone through a process from scratch and made great progress.

2) Global resource sharing provides technological improvement

The development of domestic independent brands can make use of global resources. This is a condition that South Korea did not have in the development of the passenger car industry in the 1960s and the 1980s. For example, at present, the design of the domestic car shape can be outsourced to the Italian design company, and the development of the engine can be outsourced to a German professional engine design company. These global resource sharing have brought about a gradual increase in the competitiveness of domestic car companies.

3) Long-term joint venture and cooperation lay a better industrial foundation

While developing independent brands, it has been more than 20 years since the joint venture and cooperation with foreign companies. Although the original concept of market-changing technology has not been realized, the long-term joint venture cooperation has brought many positive developments to the domestic automobile industry. The factors, including the joint venture brands and domestic brands, have been fully grown and have laid a solid foundation for the development of the Chinese auto industry.

4) Policy orientation favors independent brand development

Most enterprises have completed a certain amount of economic accumulation from the long-term joint venture and cooperation process. From the perspective of the country’s policy in the past two years, the development of independent brands has become the main policy basis for the development of the domestic auto industry. Including joint ventures investing in self-owned brands, and domestic auto companies investing heavily, making the development of self-owned brands is no longer an empty slogan.

Comprehensive strength determines the future of business development

The product platform and R&D strength, manufacturing level, marketing capability and capital accumulation are the concrete manifestations of the comprehensive strength of passenger vehicle companies.
1) The product platform and R&D reflect the existing technology accumulation of the company, especially in the case of the car market developing to medium to high level, the level of the independent brand platform determines the market competitiveness of the company; while the investment in R&D and the current level determine the company's products Continuity of line and sustainable development capability; 2) Manufacturing level Manufacturing level not only reflects the actual manufacturing and processing capacity and equipment level of the company, but also needs to build a relatively mature and complete component supply system to ensure the consistency of the company's products. High-quality, establish the basis for the company's brand operation; 3) marketing capabilities reflect the company's overall planning, brand strategy and implementation, the level of market strategy; 4) capital accumulation in the fierce market competition, has completed a better accumulation of funds The company will be competitive in the competition, and can guarantee the company's continued investment in product development and assume greater market risk.

Based on the various components of the above-mentioned comprehensive strength, we scored the corresponding companies according to the actual conditions of the existing self-owned brand cars according to the 5-point system and the total score of 20 points. Shanghai Automotive has a total score of 18.5 points. It is still the most comprehensive enterprise with strong overall strength. The development of independent brands has greater advantages. The development of independent brands is still strong and permanent.

VII. Truck ownership continues to rise under the manufacturing shift

Manufacturing output value is closely related to truck ownership

Taking South Korea and Japan as examples, the continued increase in truck ownership is closely related to the increase in the value of manufacturing output.

1) After the 1980s, South Korea's manufacturing industry entered a period of rapid development, and truck ownership continued to increase;

2) After the adjustment of the industrial structure in Japan in the 1990s, the number of trucks declined gradually, and it has maintained a high growth rate before.
The reasons for the continued increase in domestic truck ownership include:

1) Sustainable development of the domestic economy;

2) With the gradual shift of global manufacturing to China, China will become the largest global manufacturing center after Japan and South Korea;

3) The unbalanced development of the domestic economy has led to greater cost differences between developed coastal areas and inland provinces, which will lead to the gradual transfer of manufacturing industries from developed regions to inland provinces.

The transfer of manufacturing industries has driven the growth of imports and exports and increased the demand for urban logistics, leading to an increase in truck demand.

As of 2006, the growth rate of truck ownership in China has been significantly lower than that of manufacturing output in recent years, and truck sales have continued to grow.

Heavy truck competition is relatively stable, Euro III launches short-term impact on sales of Euro II products

Under the conditions of weight-based toll collection, reasonable adjustments have been made to the structure of highway transportation capacity, coupled with the opening of EMUs that have affected normal railway logistics, leading to a relatively prominent performance of the heavy-duty truck market in 2007. China National Heavy Duty Truck Group, China FAW Group, Dongfeng Motor and Shaanxi Automobile Industry ranked the top four, and the heavy truck industry is relatively stable in the short term.

According to the planning and requirements of the National Environmental Protection Agency, the launch time of Euro III standards is expected to be July 1, 2008. Under this premise, sales of Euro II products in the first quarter of 2008 will still be better, but it may be 2008. The best sales stage, from the perspective of the whole year, the heavy truck market sales situation will show the situation of high, low, 7-October may be low sales, the end of the year will be another peak.

Macro-control will affect the heavy truck market in 2008

The short-term impact on the heavy-duty truck sales market is the newly-added investment in fixed assets.

From January to November 2007, the cumulative growth rate of new fixed assets was 20.7%, which was a significant decline from 20% in January-October.

In 2008, the country’s macroeconomic policies will prevent the economy from overheating and the regulation will reduce the growth of investment in fixed assets. In addition, tightening monetary policy will also control auto loans, reduce investment appetite, and affect the sales of commercial vehicles. It is expected that the sales volume of heavy trucks in 2008 will increase. Will appear to fall back.

From January to October 2007, the total export volume of heavy-duty trucks and tractors of more than 14 tons was 30,403, although the year-on-year growth rate was relatively high (of which more than 14 tons of heavy-duty trucks increased nearly 270% year-on-year, the number of tractors increased by 117.5. ) However, it only accounts for 2.5% of the total domestic heavy truck output, and has little influence on the smoothness of the domestic market.

8. The big customer market will continue to grow steadily in 2008

Bus driver factors include:

1) The development of urban public transportation continues. To solve the traffic pressure, urban transportation advocates the policy of giving priority to public transportation; 2) the natural regeneration of the big customer market; 3) the natural growth and product upgrading of the tourism market; 4) the gradual development of the export market.

According to the statistics of the China Association of Automobile Manufacturers, the total number of passenger car exports reached 64,430 in January-October 2007, of which the sales of large passenger cars reached 7,299 units, which accounted for 1-10 points. High, the influence of the export market on domestic passenger car companies is gradually increasing, and continuous development of the international market will smooth the fluctuation of domestic demand.

In the large and medium-sized passenger car market, the leading position of “one pass and three dragons” has been formed, and enterprises have obvious competitive advantages. In the large passenger car market, the industry concentration is relatively high. The top ten manufacturers occupy nearly 90% of the market share. Zhengzhou Yutong Bus has long occupied the leading position in the domestic big passenger market with a market share of 26% and has the potential for further expansion.

九、风险提示

成品油价格上升为必然趋势

自2002年以来，以北京市93#号汽油为例，截至到2007年11月为止，涨幅已经超过111%。在国际原油价格居高不下的情况下，国内成品油价格仍然有较大的上涨压力，而且这种趋势不可避免。成品油价格将持续商战，我们认为其对于各个子行业的长期影响不尽相同，影响部分行业的短期销售，但对整个行业长期发展有限：

1）对于乘用车市场，由于其消费品特征明显，短期内影响消费者心理，从而影响短期内的汽车销量，但长期影响力有限。产品消费结构的变化受油价上涨压力、在居民消费能力提高情况下，向中高级消费趋势明显；2）对于商用车市场，由于其生产性物资特性明显，需求相对刚性，油价上涨对商用车市场的影响能力相对有限，并可能导致货运以及客运费用的相对涨价，从而保证商用车市场的持续增长。

人民币升值趋势明显、对各子行业影响不一

人民币对美元汇率2008年1月2日中间价为人民币7.2996元，按汇改时8.11元计算，自汇改来人民币累计升值幅度已达到10%。人民币的升值是必然的趋势，而且不仅针对于美元。自2007年年底以来，人民币对各主要工业国家货币已经全面升值。人民币升值下，对汽车行业的影响大致于下：

1）由于多数轿车品牌目前来说关键零部件均从日元区、欧元区以及日元区进口，人民币升值情况下，将造成多数自主品牌的汇兑收益，从而降低相关企业的财务费用，如一汽轿车多数产品、大多数合资公司的高端品牌；2）人民币升值将对出口占比较多的商用车公司如金龙汽车、宇通客车、中国重汽等企业的盈利造成一定压力，从而影响该行业的整体盈利水平；3）在人民币升值情况下，劳力动成本也存在较大上升压力，劳动力成本上升预期情况下，将导致以劳动密集型为主要特性商用车生产制造的相关公司受到较大成本上升压力，从而影响企业的盈利水平；4）进口车市场销量有可能扩大负面影响国内高端产品市场。

原材料价格持续上涨带来成本压力

2007年汽车用钢板、钢材价格，石油价格上涨导致橡胶塑料价格均呈现上涨趋势，而且这种趋势将在2008年继续得以延续。原材料价格的上涨对汽车个子行业的影响主要如下：

1)对于中高级产品，由于其产品附加价值相对较高，原材料价格的上涨对其成本压力相对较小；对于中低端产品，其产品附加价值较低，相应零部件供应体系盈利能力相对低下，在原材料成本上升压力下，盈利能力将受一定影响。

2）对于国内商用车企业来说，其盈利能力相对有限，而原材料成本占其总成本相对较高，在产量增幅有限情况下，原材料价格的上涨也将较大影响企业的盈利能力；3）原材料价格上涨，对于附加价值较低的汽车零部件企业带来较大的生存压力，这类企业多数处于略势地位，谈判能力较低。上上下游的挤压，原材料价格的持续上涨将考虑企业的发展能力。这些企业主要包括轮胎企业、发动机缸体缸盖制造企业等。

十、投资策略与重点公司介绍

2008年，预计汽车行业销量同比增速达到20.17%，总销量将超出1,000万辆。其中轿车销量达到585万辆，同比增长22.01%；卡车销量228万辆，同比增长15.04%；客车销量达到39.7万辆，同比增长17%。

根据行业市场环境的变化趋势，2008年乘用车行业仍然将维持快速稳定增长，其快速发展不确定性因素最小；大中客车行业将继续平稳发展；卡车行业受固定资产投资增速回落以及宏观政策调控的影响增幅将出现一定下滑。在盈利能力上，乘用车市场消费格局的变化导致其盈利能力所受影响最小化，而客车以及卡车行业受原材料、人民币升值等因素所受负面影响相对较大。在具体投资策略上，我们的主要投资思路如下：

综合实力决定企业的投资价值

发展自主品牌具有一定的优势，而且自主品牌的投资也是未来3-5年投资中国汽车行业的投资主题。综合实力决定企业发展自主品牌的未来：

1）符合行业发展规律：规模化经济特性明显、企业强者恒强；

2）国家产业政策：支持发展大型汽车企业，支持行业整合。

维持对上海汽车（600104）的强烈推荐-A的投资评级。

市场对于上汽普遍存在的困惑是：如此大的企业还能有快速增长吗？

我们的回答是：在行业快速增长的时候，国外强力合资品牌已经多数进入市场的情况下，如果一个企业实力最强却落后于行业增长的假设，无疑等同于优秀企业在行业快速发展的时候前进速度落后于起步较晚、实力一般的公司，这种逻辑无疑是很荒谬的。

我们对于上海汽车的理解是：最优秀的国际化本土企业

1）上汽下属合资企业上海大众以及上海通用盈利能力强，资金雄厚。投资者所担心通用销量增长缓慢的问题随着营销策略调整得到改善，2007年12月销量达到5万辆；

2）通过并购南汽已经实现产权合一，自主品牌包括荣威与名爵两个品牌。产品平台起点较高，依托三地研发实力，发展自主品牌前景可期；

3）在未来的行业整合中，以上海汽车目前的实力，必定成为行业整合的受益者；

4）商用车平台开始搭建，自主品牌轿车发展前景良好、南汽资产整合预期、双龙汽车实现盈利等有利条件下，上海汽车必将收获2009。

5）预计2007、2008年上海汽车总销量将分别达到169、200万辆（不包括收购南汽汽车销量以及红岩汽车销量的统计）。2007、08、09年EPS分别为0.81、1.08、1.45元，6个月目标价格38元。

集团整合带来的投资机会

不管是行业内企业的合并，还是国内大型央企的整合，其目的始终是为整合有效资源，利于行业以及企业的健康发展。

与一汽相同规模的上汽完成整体上市以后，经营思路更加清晰，在资本市场上也筹得较多资金发展自主品牌。

一汽集团虽然2007年盈利能力超出预期，但是对于长期发展来说，庞大的人员编制、复杂的业务体系以及管理模式都是制约其发展的不利因素，因此集团改制对于企业的发展是迫切的，在改制完成情况下，整体上市将是水到渠成。我们判断，一汽集团整体上市将从2007年预期变为2008年现实，一汽集团的整体上市具有较大投资机会。

维持对一汽轿车（000800）强烈推荐-A的投资评级，12个月估值区间43-50元，维持对一汽夏利（000927）推荐-A的投资评级（详细价值分析请参考《2007年四季度汽车行业投资策略》）。考虑整车公司以整车以及关键零部件为主的发展模式，我们认为整体上市将难以包含以生产非关键零部件为主要产品公司一汽四环（600742）。我们近期将对一汽轿车以及集团的经营状况作出具体分析，敬请留意。

一汽集团2006年资产总值达到1098.5亿元，净资产342.1亿元。2007年利润总额达到123亿元，销售收入增长至1880亿元，整车销售将达到143万辆，从目前的销售量来看，仅低于上海汽车的170万辆。

我们在2007年四季度投资策略报告中，重点对一汽集团整体上市后的价值作出了分析，在报告中保守预计有效整合的资产（解放汽车、大众系企业以及丰田系企业）2007年为集团公司贡献净利润75-85亿元。

近期一汽集团发生如下变化：

1）集团预计2007年盈利将实现123亿元；2）一汽集团2007年12月27日正式换帅，原总经理竺延风出任吉林省副省长，吉林市人大常委会主任出任集团总经理，并担任公司副党委书记。

集团利润大幅上升，远超出我们预期，主要受益于2007年汽车行业的整体增长水平以及公司较为完善的产品结构，企业规模效应继续释放以及各种措施下的节约成本行为导致盈利能力大幅提高；另一方面受换帅事件的影响，2007年有做高利润的愿望。

目前集团改制工作仍然有条不紊进行，最大的零部件公司一汽富奥改制已经完成，解放汽车公司以及客车公司正在改制过程中，一旦最主要部分改制完成，其它相关企业改制将变得更加顺利。

我们认为集团换帅以及人选上有利于整体上市进程的加速：

1）集团整体改制与上市实际上由国资委主导，目前集团领导的替换不可能导致整个进程的中断与延误；2）新任总经理曾先后担任一汽四环的董事长，一汽轿车副董事长，对于一汽集团资产运营知根知底，并不需要较长的时间来适应；3）新任总经理具有较长政府工作背景，善于处置在改制过程中出现的问题；4）如果一汽集团要提高发展速度，整体改制的工作必须尽快完成，才能促使大的集团焕发出新的竞争力，我们认为新任总经理的首要任务将是尽快促使集团整体改制工作的开展，才能扫除影响企业健康发展的障碍。 (本文来源：招商证券 )
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