1、EQUITY:AUTOS&AUTO PARTSChina Auto/EV/BatteriesGlobal Markets Research10 August 2024Into a new era where EV becomes mainstreamOverall PV sales momentum muted in Jul-24As a traditionally low season for auto sales,the China PV market delivered 2.0mn wholesale shipment units(-5.0%y-y and-10.0%m-m)in Jul

2、-24,according to CAAM;PV retail sales,excluding minivans,were 1.7mn units in the same month(-3.0%y-y and-2.5%m-m),according to CPCA.We believe the muted momentum during the month was due to:1)lower-than-expected domestic growth(as a result of sluggish performance mainly for ICE cars and also the hig

3、h temperature),and 2)slower-than-expected exports growth.China PV EV monthly retail sales remain solid,reaching 878k units in Jul-24,+37.0%y-y and 2.5%m-m.As a result,we note EV penetration rose to 50.7%,quickly underpinning our expectation that monthly EV penetration should sooner or later surpass

4、the 50%threshold in 2H24F.Looking into Aug-24F,we expect improving m-m sales momentum due to a low base in Jul-24 and potential positive impact from the revised trade-in subsidy plan,while the y-y momentum may not be strong considering the high base effect throughout 2H23.Overall,we maintain our rel

5、atively cautious view on the entire China auto market,as:1)the local demand situation remains slightly vague entering into 2H24F,and 2)competition dynamics is unchanged as the active players are aiming for further market share gains.Our top pick within OEMs remains BYD(1211 HK,Buy)given its strong p

6、resence in the China EV market,vertically integrated business structure,and proactive approach towards overseas expansion.Within the auto supply chain,we continue to like Foryou(002906 CH,Buy)and Desay SV(002920 CH,Buy),and believe that both the names should be positioned well to benefit from techno