MS汽車行業報告英文版(pdf 19頁)

? 2002 was the year of surprise
2002 surprised everyone on the upside. Industry unit sales increased37% while unit sales in the sedan market grew 56%. 2002 was thestart of a significant secular move by the auto industry, in our opinion,triggered by China’s WTO entry.
? 2003 is the year of increased expectations
Deeper deregulation, including tariff cuts, increased quotas, and theopening up of auto finance are pushing China onto the global track in2003. We expect domestic sedan unit sales to grow a further 35% andaverage auto prices to fall 10-15%. This is based on our estimate of a30% YoY addition in sedan capacity in 2003.
? Strong growth to continue in the next few yearsChina’s auto market was closed for almost half a century. We believethat a step toward satisfying domestic demand, restrained by the lackof product choices and auto finance, and expensive automobile pricesand licensing costs, was taken in 2002. We conservatively estimateimmediate pent-up demand at 15 million sedans for urban families, incontrast to only 1.1 million unit sales of sedans in 2002.
? Pitching the global market in the long term
We believe that, in the long term, China has the potential to putdownward pressure on prices in the global auto industry. However, inview ofthesophistication of the global auto industry, China is likely toneed more than a few years to scale up and become mature, in bothupstream and downstream areas. Eventually, as we have seen in somany other industries, cost advantage is likely to give China a decentshare of the global market. We reiterate our Overweight-V rating onBrilliance China Automotive (1114.HK, HK$1.82, TP HK$2.90) andEqual-Weight-V rating on Denway Motors (0203.HK, HK$3, TPHK$3.10).
? We reiterate our In-Line view on the China Automobile industryStrong near-term demand is countered by overcapacity and the risk ofprice cutting.
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