DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.17January2019AsiaPacific/ChinaEquityResearchAutomobiles&ComponentsChinaPassengerVehiclesSectorFORECASTCHANGEResearchAnalystsBinWang85221016702bin.wang@credit-suisse.comNickLi85221016704nick.li.3@credit-suisse.comCarrieJiang85221016723carrie.jiang@credit-suisse.comWeiFang85221016710wei.fang@credit-suisse.com2019Outlook:DemandtobottomoutonimmediatestimulusFigure1:Chinesepassengervehiclesdemandgrowthoutlook6811121416182024242324257.2%47.2%34.4%8.4%11.7%19.5%12.7%9.1%17.6%2.6%-3.8%4.9%1.0%-15%-5%5%15%25%35%45%55%051015202530200820092010201120122013201420152016201720182019e2020eUnitmnTotalpassengervehiclesalesYoYSource:CAAM,CreditSuisseestimatesNote:theyellowbarsarethefirstyearsofstimuluspoliciesrelease■Autostimuluslikelytosurpriseontheupside,notjustboostruraldemand/NEVs.NingJizhe,deputyheadofNationalDevelopmentandReformCommission(NDRC),saidlastweektheywillboostcarconsumptionbysupportingruralconsumptionandnewenergyvehicles(NEVs).Weexpectthegovernmenttotakeothermorepowerfulmeasuresin1Q19,likeeasingpurchasequotacontrolinsomeregions,phasingoutpollutingcars,andtaxreduction(value-addedtaxandpurchasetax).Thusweforecastpassengervehicle(PV)demandgrowthtobottomoutfrom4Q18’s-15%andreturnto+5%YoYin2019,aboveconsensus’flatYoY.■Prefercomponentmakerstocarmakers.Weexpectbothcomponentsandcarmakerstobenefitfromthestimuluspolicies,butwepreferthecomponentssector.That’sbecausecarmakersarelikelytobenegativelyimpactedbyotherupcomingpolices,including(1)earlierimplementationofemissionstandardupgradeinsomeregions,and(2)NEVgovernmentsubsidyreduction(down50%YoY).■Incar-ma...
