Core Viewpoint - The report from CMB International indicates a positive investment rating for the mainland automotive industry, driven by a significant increase in the penetration rate of new energy vehicles, which reached 57.8% in September. The firm anticipates a strong sales performance in the fourth quarter due to various market factors [1] Group 1: Market Performance - In September, the retail sales of passenger vehicles in China reached 2.241 million units, representing a year-on-year increase of 6.3% and a month-on-month increase of 11% [1] - Cumulative retail sales of passenger vehicles from January to September 2025 totaled 17.005 million units, reflecting a year-on-year growth of 9.2% [1] Group 2: Future Outlook - The adjustment of the new energy vehicle purchase tax exemption policy in 2026 is expected to stimulate consumer purchases towards the end of the year, alongside the traditional peak sales seasons of "Golden September and Silver October" [1] - The automotive market is anticipated to enter a consumption lull after the fourth quarter sales surge, necessitating cautious monitoring of stock price fluctuations in the sector [1] Group 3: Company Highlights - Xpeng Motors (09868) is expected to boost sales and gross margins with the launch of its new P7 and extended-range models [1] - Geely Automobile (00175) is focusing on internal resource integration following the privatization of its Zeekr brand [1] - Seres is expanding its high-end market presence and improving profitability with its Aito series [1]

Global Macro - The report indicates that the likelihood of the proposed large-scale tariff increases by the US on China is low, despite recent announcements by President Trump regarding a 100% tariff increase on certain exports starting November 1, 2025 [3][4] - It is expected that both parties will likely reach a de-escalation arrangement during the upcoming summit, which would stabilize trade relations and create conditions for further economic stability [3][4] - Short-term fluctuations in Chinese assets are anticipated, but these should not alter the medium-term bullish trend, presenting potential buying opportunities [4] Automotive Industry - In September 2025, the penetration rate of new energy vehicles (NEVs) reached 57.8%, with retail sales of passenger vehicles hitting a record high of 2.241 million units, reflecting a year-on-year increase of 6.3% [5][7] - The export of passenger vehicles, including NEVs, maintained a strong growth momentum, with total exports reaching 528,000 units in September, a year-on-year increase of 20.7% [5][7] - The report suggests that the upcoming adjustment of the new energy vehicle purchase tax policy in 2026 is likely to stimulate consumer purchases before the end of the year, particularly during the peak sales season [7] - Investors are advised to remain cautious as the market may enter a consumption lull after the fourth quarter sales surge, with specific attention to stock price fluctuations in the sector [7]