• Resource:


    Some existing 2020/25 targets reiterated with some additional targets

    Earlier today, China’s Ministry of Industry and Information Technology (MIIT),The National Development and Reform Commission (NDRC), and The Ministryof Science and Technology (MoST) jointly announced the national Mid-to-longDevelopment Plan of Auto Industry  to provide thedevelopment guidance of the auto industry. Key benchmarks are:
    By 2020, the annual sales/production target of new energy vehicles (NEVs)is expected to reach 2m units, and the NEV sales/production is expected toaccount for 20% of total auto sales/production by 2025, with improvingenergy density and lower per hour unit cost.

    By 2020/25, the penetration of new vehicles equipped with DA (driverassistance), PA (partial assistance), CA (conditional assistance) aretargeted to reach 50%/80%. The penetration target of the more advancedconnected DA is expected to reach 10%/25% by 2020/25.

    By 2020, average fuel consumption of new passenger vehicles (PVs) andenergy saving vehicles is targeted to be lowered to 5.0L/100km and4.5L/100km, respectively. Meanwhile, average fuel consumption ofcommercial vehicles (CVs) should be comparable to leading internationalstandard with the adoption of national VI emission standard. By 2025,average fuel consumption of new PVs should reach 4.0L/100km and CVs’fuel consumption should stay comparable to leading international standard.

    Establish “OEM-part supplier” cooperation relationship and encouragecoordinated development of OEM and suppliers. By 2020, China targets togroom some auto suppliers with over RMB100bn revenue, core technologyownership and strong global competitiveness. By 2025, China aims athaving world leading OEMs and auto suppliers.

    Continue to expand the market, utilize foreign capitals and bring inadvanced technology and talents; encourage JVs to increase the R&Dexpenditure, and gradually relax foreign OEMs’ JV share holding limits.

    By 2020/25, the after-market service revenue is expected to reach45%/55% of the total auto industry value chain’s revenue.

    Deutsche Bank view – positive implications for advanced suppliers and dealersSome of the targets above, including NEV sales and fuel efficiency targets, arealready mentioned in previous government’s papers and should support ourview of strong NEV demand growth prospect. For the remaining targets, wethink that the adoption of driving assistance systems, together with tightenedfuel efficiency requirement going forward, should provide new businessopportunities to advance part suppliers. Last but not least, we do not expectsudden change in auto OEM JVs’ shareholding structure since most of existingJVs’ shareholding agreements will still last for another many years.