Core Viewpoint - The automotive sector is expected to maintain a positive outlook, driven by three main themes: dividends, smart technology, and robotics [5][12][6]. Weekly Review Summary - In the first week of July, the compulsory insurance for vehicles reached 398,000 units, showing a week-on-week decrease of 30.2% and a month-on-month increase of 12.1% [10][51]. - The performance of various automotive segments this week ranked as follows: SW automotive parts (+0.1%) > SW automotive (-0.4%) > SW motorcycles and others (-0.4%) > SW commercial cargo vehicles (-0.6%) > SW passenger vehicles (-1.4%) > SW commercial passenger vehicles (-1.8%) [10][19]. Team Research Achievements - The team released analyses on Huawei's automotive business core competitiveness and a review of Yutong Bus's H1 sales [3][11]. Key Industry Changes - The launch event for the Li Auto i8 is scheduled for July 29 [4][11]. - Seres expects to achieve a net profit attributable to shareholders of 2.7-3.2 billion yuan in H1 2025, with a Q2 net profit estimate of 2.2 billion yuan, reflecting a year-on-year increase of 57% and a quarter-on-quarter increase of 195% [4][11]. - Leap Motor's new C11 model has been launched [4][11]. - The third annual meeting of the 2025 China Automotive Research Index (IVISTA & C-AHI) technical committee will be held [4][11]. Sector Viewpoint Reaffirmation - The automotive sector remains a strong investment focus, with a particular emphasis on dividends, smart technology, and robotics as the main investment themes [5][12]. - Key areas of market attention this week included the Ministry of Industry and Information Technology's establishment of a feedback window for key automotive enterprises to implement a 60-day payment period, Trump's 30% tariffs on Mexico and the EU, and the potential reverse listing of Zhi Yuan Robotics through the acquisition of Shangwei New Materials [5][12]. Current Automotive Sector Configuration - The company believes that "only by adhering to technological innovation can the automotive industry avoid internal competition and move towards healthy development," and continues to favor the three main themes for 2025: dividends & good structure, AI smart technology, and AI robotics [6][12]. - Recommendations for the dividend & good structure theme include passenger vehicles (Yutong Bus), heavy trucks (China National Heavy Duty Truck Group A-H / Weichai Power), and parts suppliers (Fuyao Glass, Xingyu Co., New Spring Co., Jifeng Co.) [7][12]. - For the AI smart technology theme, preferred stocks include Hong Kong-listed passenger vehicles (Xpeng Motors-W, Li Auto-W, Xiaomi Group-W) and A-shares (Seres, SAIC Motor, BYD), with parts suppliers including Horizon Robotics-W, China Automotive Research, Desay SV, Bertley, and Heisima Intelligent [7][12]. - The AI robotics theme favors parts suppliers such as Top Group, Junsheng Electronics, Fuda Co., Aikedi, Ruihu Mould, and Jingzhu Technology [7][12]. Weekly Automotive Market Performance - The automotive sector's performance in A-shares ranked 30th this week, while in Hong Kong, the automotive and parts sector ranked 11th [16][19].

Investment Rating - The report maintains a positive outlook on the automotive sector, emphasizing the potential for growth driven by innovation and market dynamics [5]. Core Insights - The automotive sector is expected to benefit from three main themes: dividends, AI intelligence, and robotics, with a recommendation to increase exposure to dividend-focused stocks in the second half of the year [5]. - The report highlights a significant drop in passenger car insurance registrations, with a week-on-week decrease of 30.2%, but a year-on-year increase of 12.1% [2][48]. - The report anticipates a total retail sales volume of 23.69 million units for 2025, representing a year-on-year growth of 4.1% [49]. Summary by Sections Weekly Review - In the first week of July, the total number of compulsory insurance registrations for passenger cars was 398,000, reflecting a week-on-week decrease of 30.2% and a month-on-month increase of 12.1% [2][48]. - The performance of various segments showed that automotive parts outperformed other categories, with a slight increase of 0.1% [2]. Industry Changes - Key developments include the scheduled launch of the Li Auto i8 on July 29 and the expected net profit of 2.7 to 3.2 billion yuan for Seres in the first half of 2025, with a significant quarter-on-quarter increase [3][5]. - The report notes the introduction of new models, such as the Leap Motor C11, and the upcoming annual meeting of the China Automotive Research Institute [3]. Market Performance - The automotive sector ranked 30th in A-shares and 11th in Hong Kong stocks for the week, with the automotive parts sector showing the best performance [9][16]. - The report indicates that the overall valuation of the automotive parts sector has increased, while other segments have seen declines [35]. Future Outlook - The report predicts that the demand for passenger vehicles will remain strong due to policies encouraging vehicle replacement and upgrades, estimating a contribution of 1 to 1.7 million additional units in sales [49]. - The penetration rate of new energy vehicles is projected to reach 60.6% by 2025, with significant growth expected in both domestic and export markets [50][57].