Citibank: The Mainland's new trade-in subsidy policy may speed up the integration of BYD shares (01211) and other large-scale advantages in the entry-level model market

The Zhitong Finance App learned that Citibank released a research report saying that mainland China has updated its passenger car trade-in subsidy policy this year. Although the maximum subsidy remains the same as last year, this year's subsidy will be calculated as a percentage of the vehicle price, which is different from last year's fixed amount. Under the end-of-life renewal policy, only new energy vehicles with a price higher than RMB 166,700 (same below) and fuel vehicles above 150,000 yuan are eligible for the maximum subsidy; under the replacement and renewal policy, only NEVs priced above RMB 187,500 and fuel vehicles above RMB 21,700 are eligible for the maximum subsidy amount.

Citi believes that the new FY2026 trade-in subsidies for new energy vehicles and fuel vehicles may accelerate market consolidation for entry-level models (that is, the average sales price is less than 160,000 yuan). Compared with other small car companies that are still losing money, BYD (01211), Geely Auto (00175), and Great Wall Motor (02333) may have a larger scale advantage in the domestic market in terms of cost control and from the higher profit export business. It also believes that the subsidies for commercial trucks and city buses this year remain the same as last year, and should benefit Yutong Bus (600066.SH) and Sinotruk (03808).

Citi predicts that in the fourth quarter of last year, passenger car retail sales in China may deviate from normal seasonal fluctuations of about 700,000 to 800,000 units. Even if 100% of this sales volume is added back to the first quarter of this year, according to Citi's estimates, passenger car wholesale sales in the first quarter of this year will still drop 33% quarterly (down 8% year-on-year). Citi also expects the H shares of My Little Pony Zhixing-W (02026) to enter Hong Kong Stock Connect around mid-2026.