Recently, a number of brands of cars have raised prices sharply, from new energy vehicles to fuel vehicles to open a wave of price increases, can the automotive industry continue to maintain a high moment?
Cars usher in a wave of price increases //
On April 12, according to BMW's official website, BMW China's price increase involved the price and configuration adjustment of five models of BMW 3 Series, X3, X4, 4 Series and Z4, with prices rising by 1600-11000 yuan.
(Image from BMW China's official website)
Due to the rise in raw material prices, many new energy vehicles have increased prices this year. For example, in March, Tesla, BYD, Chery, Weilai and other new energy vehicles have issued price increase announcements. Recently, some veteran fuel car companies Mercedes-Benz and BMW have also followed the trend in price increases, involving a number of models, and it is expected that many brand car companies will increase prices in the later stage.
Monthly car sales fluctuate greatly.
Wind data shows that since 2021, the monthly sales of automobiles have changed from a steady growth trend, accounting for most of the year-on-year and month-on-month declines. However, under the continuous improvement of domestic consumption capacity, the monthly sales of automobiles are still very strong, most of the time remaining above 2 million units per month, and the sales scale is still not small.
Extremely wide automotive industry chain//
Overall, the automotive industry chain covers a wide range and involves many raw materials. From the perspective of the composition of various systems of the automobile, it involves multiple parts such as engine, driving system, transmission system, electronic system, steering system, braking system, body, etc., and each of these parts will involve multiple upper and middle-stream industries.
Specifically from the perspective of the new energy vehicle industry chain, Wind data shows that the upstream includes lithium ore, electrolyte, positive and negative electrode materials, diaphragms, etc., and there are more related listed companies. Such as: Ganfeng Lithium, Tianqi Lithium, Western Mining, Tianqi Materials, etc.
The middle reaches of the industrial chain followed include batteries, electronic controls, motors, thermal management, circuit systems and other aspects. Among them, there are expected to be more than 100 listed companies at home and abroad, such as Ningde Times, Tianneng Power, BYD, Desai Battery, Siemens, Hitachi and so on.
The downstream is mainly major car companies and charging pile companies that produce automobiles. Veteran traditional car companies: Volkswagen, BMW, Mercedes-Benz, Geely, SAIC, Changan, etc.; emerging car companies: Tesla, Weilai, Xiaopeng, etc.; A-share charging pile companies: Aotexun, Trident, etc.
It can be seen that the industrial chain is long and involves many components, so the price increase of raw materials has a large impact on each component, and it will naturally be transmitted to the automobile manufacturers in the end.
The auto sector has underperformed this year //
In terms of market performance, the most brilliant period for auto stocks was between March 2020 and October 2021. According to the Wind Auto Index, from the low of 4886.47 points on March 23, 2020 to the high point of 15249.32 points on October 26, 2021, the cumulative increase of the sector is as high as 180%. After the sharp rise in the previous two years, the automobile sector has been greatly adjusted this year, and the sector has fallen by 23.04% this year, which is greater than the Shanghai Composite Index and the Shenzhen Component Index in the same period.
Are there still investment opportunities in the automotive industry? //
Liu Hongchen of Guohai Securities believes that the price increase tide will be a reshuffle of the new energy vehicle market, and the market share will be further concentrated on high-quality brands. Price increases often affect consumers' short-term decision-making, and in the medium and long term, consumer psychological price levels are expected to change with changes in the overall market price environment.
Orient Securities Lu Rixin, Li Mengqiang, Lin Yu analysis believes that lithium and other core metal materials continue to rise in price, is bound to cause car companies to increase prices twice, and then affect the overall sales. However, in the case of strong demand for new energy vehicles, the shortage of resources is concentrated in the head enterprises, which is conducive to the continuous optimization of the industry pattern, and the leading pressure resistance of each link is stronger, and the gap may be further widened.
Short-term contradictions do not affect the medium- and long-term general trend of new energy vehicles. The strong consumption of electric vehicles is the result of comparison with fuel vehicles, and when the upstream returns to normal prices, sales will continue to enter rapid growth.
Lin Zijian of Huafu Securities believes that the rapid recovery of consumption after the control of the epidemic has made the automobile sector rise sharply, rising by 46.9% in the second half of 2020, outperforming the market by 21.7pct. The inflection point of this round of the epidemic has not yet arrived, and it is expected that the pace of consumption recovery after the epidemic will be slower than that after 2020Q1, and 2022Q2 is still the process of bottoming out. The market will unfold in the second half of the year, 1) the valuation after continuous adjustment is relatively reasonable, and pe and PB are currently in the 36% and 49% quantiles of the past 3 years; 2) the new energy vehicle continues to grow at a high level, the accumulated demand of the epidemic is gradually released, and the medium- and long-term logic gradually dominates after the pressure on the cost side improves.
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