GOLDEN SUN SECURITIES·2025-05-05 11:30Investment Rating - The report maintains an "Overweight" rating for the passenger car sector [4] Core Insights - The passenger car sector is experiencing an upward trend in profitability, particularly among leading companies, driven by policies such as the vehicle replacement subsidy and the introduction of advanced driving systems [1][2][3] - The industry is expected to continue its upward trajectory due to a low base in Q2 2024 and the launch of new models from major manufacturers [2][3] Summary by Sections 1. Q4 2024 & Q1 2025 Review - The transition to vehicle replacement policies has been smooth, with significant benefits from the introduction of advanced driving systems in Q1 2025 [1][9] - The total number of vehicles scrapped and replaced in 2024 is projected to exceed 2.9 million and 3.7 million respectively, significantly boosting the sector's stock performance [12] 2. 2024 & Q1 2025 Financial Summary - The financial performance of leading companies has shown significant recovery, with a marked divergence in results among different manufacturers [2][22] - BYD, Geely, and Xiaomi have seen substantial sales growth and improved profitability, while joint venture brands face pressure on both sales and profits [22][24] 3. Investment Recommendations - The report suggests focusing on strong models from companies like Geely, Xiaopeng, BYD, and Changan, as well as Huawei-affiliated brands like Seres and SAIC [3][22] - Short-term attention should be given to the implementation of vehicle replacement policies and the delivery schedules of key new models [3] 4. Market Trends - The passenger car sector has seen a surge in new model launches, covering various price segments, which has intensified competition [16][18] - The industry discount rates have remained high but are expected to stabilize as consumer demand is released through replacement policies [18] 5. Export Outlook - Passenger car exports are projected to maintain levels between 370,000 and 410,000 units in Q1 2025, with a favorable outlook for overseas demand [19][23]