Investment Highlights - The automotive industry is expected to see a recovery in passenger vehicle demand in Q1 2026 due to the implementation of subsidy policies, with a focus on high-end electric vehicles and resilient companies like Jianghuai Automobile, Geely, Great Wall, and others [3][8] - For heavy trucks, wholesale sales in 2025 are projected at 1.14 million units, a 26% year-on-year increase, with domestic sales expected to reach 800,000 units in 2026, reflecting a 3% growth [4][35] - The bus sector is anticipated to benefit from a new vehicle replacement policy in 2026, with expected sales of 40,000 units, a 5% increase year-on-year, driven by the need to replace aging buses [4][34] - The motorcycle market is projected to grow, with total industry sales expected to reach 19.38 million units in 2026, a 14% increase, and large-displacement motorcycles expected to see a 31% increase in sales [5][32] Passenger Vehicle Insights - The short-term outlook for the passenger vehicle sector is positive, with a recovery in demand expected in early 2026, supported by subsidy policies [3][8] - Key players in the domestic market include Jianghuai Automobile and high-end brands like Geely and Great Wall, while export strategies should focus on established companies like BYD and Changan [3][8] Heavy Truck Insights - In 2025, heavy truck wholesale sales are expected to reach 1.14 million units, with a significant increase in terminal sales and exports [4][35] - The market is expected to see a reduction in older trucks, with a projected elimination of 210,000 units by the end of 2025 [4][35] Bus Insights - The bus market is expected to see a slight increase in sales in 2026, with a focus on replacing older buses that have exceeded their replacement cycle [4][34] - The anticipated sales for 2025 are 38,000 units, with a 25% increase year-on-year, while 2026 is expected to see 40,000 units sold [4][34] Motorcycle Insights - The motorcycle industry is projected to grow significantly, with total sales expected to reach 19.38 million units in 2026, driven by both domestic and export markets [5][32] - Large-displacement motorcycles are expected to see a 31% increase in sales, with domestic sales projected at 430,000 units [5][32]

Investment Rating - The industry investment rating is "Overweight," indicating an expected outperformance of the industry index relative to the benchmark by more than 5% over the next six months [33]. Core Insights - The report highlights a positive outlook for the passenger vehicle sector, anticipating a recovery in demand in Q1 2026 due to the implementation of subsidy policies. Key players include Jianghuai Automobile, Geely, Great Wall Motors, and BYD, focusing on high-end electric vehicles and established export leaders [23][24]. - The heavy truck segment is projected to see a slight increase in domestic sales in 2026, with expectations of 800,000 to 850,000 units sold, reflecting a 3% year-on-year growth. Recommended companies include China National Heavy Duty Truck Group and Weichai Power [28]. - The bus market is expected to benefit from the continuation of subsidy policies, with a conservative estimate of 40,000 units sold in 2026, representing a 5% increase year-on-year. Key recommendations include Yutong Bus and King Long [27]. - The motorcycle sector is forecasted to grow by 14% in total sales in 2026, with a significant increase in large-displacement motorcycles. Recommended companies include Chunfeng Power and Longxin General [24]. Summary by Sections Passenger Vehicles - The report emphasizes a recovery in the passenger vehicle market in Q1 2026, driven by subsidy policies. Key stocks to watch include Jianghuai Automobile and Geely, with a focus on high-end electric vehicles [23][24]. Heavy Trucks - In 2025, heavy truck wholesale sales reached 1.14 million units, a 26% increase year-on-year. The report forecasts 800,000 to 850,000 units for 2026, with a 3% growth expectation. Recommended companies include China National Heavy Duty Truck Group and Weichai Power [28]. Buses - The bus market is projected to see a slight increase in sales due to favorable policies, with an expected 40,000 units sold in 2026. Key recommendations include Yutong Bus and King Long [27]. Motorcycles - The motorcycle industry is expected to grow by 14% in 2026, with large-displacement motorcycles seeing a 31% increase. Recommended companies include Chunfeng Power and Longxin General [24].