Investment Rating - The report maintains a positive investment rating for the automotive industry, particularly highlighting the performance of the robotics supply chain and suggesting a focus on leading companies and new opportunities [3]. Core Insights - The automotive sector's performance is primarily driven by the robotics supply chain, with catalysts expected to persist in the second half of the year. Traditional supply chains remain weak. The Ministry of Industry and Information Technology's "Automotive Industry Stabilization Growth Work Plan (2025-2026)" emphasizes the industrialization of intelligent connected technologies, including the conditional approval for L3 level vehicle production and accelerating breakthroughs in key technologies such as automotive chips, operating systems, artificial intelligence, and solid-state batteries. This indicates a shift in industry support from total volume logic to new technology logic [3][4]. Data Tracking - In August, new energy vehicle deliveries showed significant growth, with XPeng delivering 37,709 units, a year-on-year increase of 168.7%. BYD delivered 373,626 units, up 0.1% year-on-year, while traditional automakers like SAIC and Geely also reported substantial increases in sales [5][23][26]. - The average discount rate in late August was 9.9%, a decrease of 0.2 percentage points from earlier in the month, while the average discount amount was 22,198 yuan, down 344 yuan [5][27][28]. - The report recommends continued focus on electric vehicle manufacturers and traditional automakers with potential recovery, such as Jianghuai Automobile and SAIC [7]. Industry News - The report highlights several key developments, including the listing of Chery Automobile on the Hong Kong Stock Exchange and the launch of new models by various manufacturers, such as the LYNK & CO 10 EM-P and BYD's new SUV, the Titanium 7 [32][33]. - The retail sales of passenger vehicles in August reached 1.995 million units, a year-on-year increase of 4.6%, with new energy vehicles accounting for 110,100 units sold, up 7.5% year-on-year [32]. Market Performance - The automotive sector saw a weekly increase of 1.46%, ranking 17th out of 29 sectors. The overall market indices also showed positive growth, with the Shanghai Composite Index rising by 1.52% [10][36].

Core Insights - The company has decided to reverse its previous decision and revive a popular model after experiencing a decline in sales and facing dealer dissatisfaction [1] Group 1 - Sales have fallen significantly, prompting the company to reconsider its strategy [1] - Dealers have expressed their discontent, leading to a revolt against the company's earlier decisions [1] - The revival of the popular model is seen as a strategic move to regain market traction and dealer support [1]

Core Viewpoint - Stellantis' Ram brand is canceling the development of a full-size electric Ram 1500 pickup truck due to declining demand for electric vehicles in North America [2][4]. Group 1: Product Strategy Changes - The company has reassessed its product strategy and will discontinue the full-size battery electric vehicle (BEV) pickup, which was initially expected to launch by the end of 2024 [2]. - Ram will still introduce an extended-range electric truck, now renamed from "Ramcharger" to "Ram 1500 REV," which will feature an electric generator and a gas engine, expected to launch next year [3]. Group 2: Leadership and Market Context - New Stellantis CEO Antonio Filosa is reversing some initiatives from former CEO Carlos Tavares and is committed to making tough decisions to restore profitable growth [4]. - The overall auto industry is facing slower-than-expected adoption of electric vehicles, compounded by changes in government policies affecting EV incentives [4].

Group 1 - Stellantis is discontinuing the development of a full-size battery-electric vehicle due to slowing North American demand for such trucks [2] - The Ramcharger vehicle has been renamed to the now-shelved Ram 1500 REV, indicating a shift in strategy [2] - The re-named Ramcharger will be a hybridized light-duty pickup, reflecting a transition towards hybrid technology [2]

Core Insights - Stellantis is discontinuing its Ram 1500 electric pickup due to slow demand for full-size electric vehicles [1] Company Summary - The decision to axe the Ram 1500 electric pickup reflects the company's response to market conditions and consumer preferences [1] Industry Summary - The move indicates a broader trend in the electric vehicle market, particularly regarding full-size electric trucks, where demand has not met expectations [1]

Market Overview - The S&P 500 and Nasdaq 100 have reached new all-time highs, driven by expectations of Federal Reserve interest rate cuts [2][4] - The Dow Jones Industrials Index has decreased by -0.31% [1] - Higher bond yields are limiting stock market gains, with the 10-year T-note yield rising to 4.06% [3][8] Economic Indicators - The University of Michigan's September consumer sentiment index fell to a 4-month low of 55.4, below expectations of 58.0 [5] - Inflation expectations for the next 5-10 years increased to +3.9% from +3.5% in August, contrary to expectations of a decline [5][8] - Markets are pricing in a 100% chance of a -25 basis point rate cut at the upcoming FOMC meeting [6][9] Company Movements - Warner Bros Discovery (WBD) surged over +11% following reports of a potential acquisition bid from Paramount Skydance [13] - Tesla (TSLA) rose more than +5% after receiving approval for testing autonomous vehicles in Nevada [13] - Micron Technology (MU) increased by over +3% due to strong demand for AI chips, contributing to a +13% rally this week [14] - Super Micro Computer (SMCI) gained more than +2% after announcing high-volume deliveries of Nvidia systems [14] - Microsoft (MSFT) rose over +1% after reaching a preliminary agreement with OpenAI regarding their partnership [15] Declines in Stock Prices - Lululemon Athletica (LULU) fell more than -3% after a price target cut by Bank of America [16] - Oracle (ORCL) decreased over -3% amid reports of insider backing for a competing acquisition bid [17] - MGM Resorts International (MGM) declined more than -1% due to insider selling activity [18]

Market Overview - US equity futures are slightly lower, with small caps lagging as the stock rally appears to be losing momentum, while major indexes reached all-time highs [1] - The S&P 500 futures fell by 0.1%, while Nasdaq 100 futures remained positive due to strong tech performance, particularly from Microsoft [1] - European stocks showed subdued performance as investors await the Federal Reserve meeting next week, with the Stoxx Europe 600 Index little changed [7] Company Performance - Microsoft shares rose by 1% in premarket trading after avoiding a significant antitrust penalty from the EU, leading the Magnificent 7 stocks [3] - Adobe's stock increased by approximately 3% following a strong quarterly revenue outlook, indicating positive returns from AI investments [4] - Alaska Air gained 2% after receiving a buy rating upgrade from UBS, achieving a clean sweep of buy ratings among analysts [4] - Array Technologies saw a decline of 5% after being downgraded to underperform by BofA due to tariff impacts [4] - RH's shares fell by 8% after the company reduced its full-year sales outlook, citing new US tariffs affecting its seasonal catalog [4] - Super Micro Computer's stock rose by 5% after announcing the availability of its Nvidia Blackwell Ultra solutions [4] - Warner Bros. Discovery shares increased by 6%, continuing a significant rally after news of a potential bid from Paramount Skydance [4] Economic Indicators - Analysts expect small caps to outperform larger indices over the next twelve months, with a potential 20% advance in the Russell 2000 compared to an 11% increase in the S&P 500 [6] - The market anticipates between two to three quarter-point rate cuts by the Federal Reserve by year-end, with some traders betting on a half-point cut next week [3][5] Commodity and Currency Movements - Commodities showed mixed results, with oil and base metals prices rising, while precious metals experienced declines [1][12] - The dollar rebounded from previous losses, with the yen lagging behind G-10 currency peers [10] Geopolitical and Trade Developments - US Treasury Secretary Scott Bessent is set to meet with Chinese Vice Premier He Lifeng next week to discuss trade and economic issues [21] - The US is pressuring G7 countries to impose higher tariffs on India and China regarding Russian oil purchases, which may impact market sentiment [17][37]

Core Viewpoint - Stellantis is preparing to adapt its business strategy in response to the evolving U.S. tariff environment, with a focus on increasing revenues through new vehicle launches and addressing inventory issues [1][2][4][6]. Group 1: Tariff Environment - The CEO of Stellantis indicated that the final scenario regarding U.S. tariffs is becoming clearer, and the company is ready to take action based on this clarity [1][2]. - Stellantis has a significant manufacturing presence in the U.S., Mexico, and Canada, and is engaged in productive discussions with the Trump administration regarding tariffs [2][3]. - In the previous year, over 40% of Stellantis' 1.2 million vehicle sales in the U.S. were imports, primarily from Mexico and Canada, which are subject to a 25% tariff [3]. Group 2: Financial Impact and Strategy - Stellantis previously warned of a €1.5 billion ($1.8 billion) impact from U.S. tariffs for the current year, while also committing to new vehicle launches to reconnect with customers [4]. - The company's shares rose by 9.2% following the CEO's remarks, indicating positive market reception to the new strategy [4]. - The CEO emphasized that increasing revenues through new models is crucial for Stellantis' future strategy and cash generation [4][6]. Group 3: Product Strategy - Stellantis plans to reintroduce models such as the Jeep Cherokee and 8-cylinder RAM trucks, which were previously dropped and contributed to declining sales [5]. - The U.S. market is identified as the top priority for Stellantis, with a new business plan set to be presented in the first half of next year [5]. - The CEO stated that the immediate goal is to improve cash generation, with a focus on increasing revenue as a primary lever [6]. Group 4: Inventory Management - Stellantis has experienced a cash burn of over €9 billion ($10.6 billion) from 2024 to the first half of this year due to declining sales and profits, particularly in North America [6]. - The company has managed to bring inventories back to "very healthy" levels, addressing previous overhang issues [6].

Core Insights - Increasing revenues through new models is a key pillar of Stellantis' future strategy and a means to restore cash generation [1] Group 1 - The new CEO Antonio Filosa emphasized the importance of new models in driving revenue growth [1] - The strategy aims to enhance cash generation for the company [1]

Summary of Stellantis Conference Call Company Overview - **Company**: Stellantis - **CEO**: Antonio Filosa, appointed less than three months ago, has over 26 years of experience within the company [2][4] Key Priorities - **Business Growth**: Focus on new product launches, particularly in North America, where market share has declined from 12% to around 7% due to phasing out key nameplates [5][6] - **Flawless Industrial Execution**: Emphasis on improving operational efficiency and inventory management [10] - **Increased Profits**: Aim for visible improvement in business indicators on a quarterly basis [4] Product Launches - **New Product Actions**: - Return of the Hemi V8 engine in Ram 1500, with over 40,000 orders received shortly after announcement [6] - Introduction of the Dodge Charger with an internal combustion engine and a new Jeep Cherokee [6][12] - Plans for a Ram midsize pickup truck to fill a gap in the market [8] Inventory Management - **Dealer Inventory**: Significant reduction in aged inventory, with a focus on new and refreshed models for 2024 and 2025 [9][10] Market Expectations - **Jeep Cherokee Sales**: Anticipated to sell between 100,000 to 200,000 units annually, returning to a significant segment of the market [11][12] - **Financial Services**: Development of a financial services unit in North America expected to drive additional demand as interest rates stabilize [15] Regulatory Environment - **Tariffs and U.S. Administration**: Ongoing discussions with the U.S. administration regarding tariffs and incentives for U.S.-built vehicles [17][18] - **European Regulations**: Concerns over CO2 emission targets deemed unattainable, with suggestions for flexibility in regulations to stimulate demand [24][25] Collaboration and Synergies - **Leapmotor Partnership**: Successful collaboration with Leapmotor, which has seen significant growth in sales and aims to expand into new markets [29][30] Regional Performance - **Latin America**: Stellantis holds a 24% market share, nearly double that of the second player, with a strong focus on localization and understanding consumer needs [36][37] - **Middle East and Africa**: Plans for increased localization and product offerings to enhance market presence [37][38] Financial Outlook - **Cash Flow Management**: Aiming for gradual improvement in cash generation and profitability, with a focus on increasing revenue [40][41] - **Dealer Relationships**: Efforts to restore relationships with dealers after previous management issues, with positive reception of new products [44][48] Future Product Development - **Midsize Truck and REV**: Plans to introduce a Ram 1500 REV and a new midsize truck by 2027, with a focus on performance and market competitiveness [53][56] Conclusion - **Overall Strategy**: Stellantis is focused on revitalizing its product lineup, improving operational efficiency, and navigating regulatory challenges while maintaining strong market positions in key regions [4][24][36]