According to a research report, the trade-in policy effects became more apparent in Q2 2025, with both passenger vehicle and commercial vehicle volumes rising quarter-over-quarter. Q2 2025 industry passenger car wholesale sales reached 7.11 million units, up 13.0% year-over-year and 10.8% quarter-over-quarter. New energy passenger car wholesale sales hit 3.63 million units, up 33.6% year-over-year and 25.2% quarter-over-quarter, with penetration rate reaching 51.1%, up 7.9 percentage points year-over-year and 5.9 percentage points quarter-over-quarter, breaking through the 50% threshold.

Benefiting from production and sales scale growth, Q2 2025 auto parts revenue increased quarter-over-quarter with improved accounts receivable turnover ratios. Additionally, heavy-duty truck sales rose quarter-over-quarter in Q2 2025. Facing short-term challenges from declining natural gas demand, leading companies maintained superior product capabilities and strengthened cost and expense controls, delivering better-than-expected performance.

**Industry Overview: Trade-in Policy Effects Further Evident, Q2 2025 Demand Shows High Quarter-over-Quarter Growth**

The trade-in policy effects became more pronounced in Q2 2025, with both passenger and commercial vehicle volumes rising quarter-over-quarter. Q2 2025 industry total revenue reached 921.1 billion yuan, up 9.1% year-over-year and 15.4% quarter-over-quarter. Net profit attributable to shareholders was 33.9 billion yuan, down 8.9% year-over-year but up 2.0% quarter-over-quarter, showing quarter-over-quarter operational improvement.

Q2 2025 industry overall gross margin was 15.6%, down 0.9 percentage points year-over-year and 0.3 percentage points quarter-over-quarter, with the quarter-over-quarter decline mainly due to passenger car segment impact. Period expense ratio was 11.2%, down 0.4 percentage points both year-over-year and quarter-over-quarter, showing improvement in both comparisons. Q2 2025 industry operating cash flow as a percentage of revenue was 14.0%, up 2.2 percentage points year-over-year and 16.2 percentage points quarter-over-quarter, indicating improved cash flow levels.

**Passenger Cars: Strong Demand, Hong Kong-Listed OEMs Show High Delivery Growth**

Q2 2025 industry passenger car wholesale sales reached 7.11 million units, up 13.0% year-over-year and 10.8% quarter-over-quarter. New energy passenger car wholesale sales hit 3.63 million units, up 33.6% year-over-year and 25.2% quarter-over-quarter, with penetration rate reaching 51.1%, up 7.9 percentage points year-over-year and 5.9 percentage points quarter-over-quarter, breaking through 50%.

Q2 2025 passenger car segment achieved total revenue of 532.2 billion yuan, up 10.5% year-over-year and 21.4% quarter-over-quarter. Q2 2025 passenger cars achieved net profit attributable to shareholders of 13.31 billion yuan, down 29.1% year-over-year and 5.5% quarter-over-quarter. Net profit margin attributable to shareholders was 2.5%, down 1.4 percentage points year-over-year and 0.7 percentage points quarter-over-quarter. The quarter-over-quarter decline was mainly due to Q2 2025 leading company BYD COMPANY's increased proportion of intelligent driving vehicle models driving up costs, with scale effects not yet apparent.

For Hong Kong-listed stocks, Q2 2025 XPeng/Leapmotor delivered 103,000/134,000 units respectively, up 241.6%/151.7% year-over-year and 9.8%/53.2% quarter-over-quarter respectively, showing impressive delivery performance. Leapmotor, benefiting from high delivery volumes, achieved net profit of 0.3 billion yuan in H1 2025, turning profitable.

**Auto Parts: Revenue Up Quarter-over-Quarter, Accounts Receivable Turnover Improves**

Benefiting from production and sales scale growth, the auto parts segment achieved total revenue of 251.64 billion yuan in Q2 2025, up 10.5% year-over-year and 9.9% quarter-over-quarter. Net profit attributable to shareholders was 14.97 billion yuan, up 19.4% year-over-year and 6.5% quarter-over-quarter. Net profit margin attributable to shareholders was 6.0%, up 0.4 percentage points year-over-year and down 0.2 percentage points quarter-over-quarter.

Auto parts segment gross margin was 18.2%, up 0.1 percentage points year-over-year and 0.4 percentage points quarter-over-quarter, benefiting from expanded revenue scale. Q2 2025 auto parts operating cash flow was 27.1 billion yuan, up 10.3% year-over-year, accounting for 10.8% of revenue, basically flat year-over-year.

Q2 2025 auto parts accounts receivable turnover days were 88.3 days, down 8.0 days quarter-over-quarter, with improved accounts receivable turnover ratio. Inventory turnover days were 73.3 days, down 6.3 days quarter-over-quarter, with improved inventory turnover ratio.

**Trucks and Buses: Volume Growth, Leading Companies Exceed Expectations**

Heavy-duty truck sales rose quarter-over-quarter in Q2 2025. Facing short-term challenges from declining natural gas demand, leading companies maintained superior product capabilities and strengthened cost and expense controls, delivering better-than-expected performance.

Q2 2025 Weichai Power/China National Heavy Duty Truck Group net profit attributable to shareholders were 2.93/0.36 billion yuan respectively, down 11.2%/up 4.0% year-over-year and up 8.2%/15.4% quarter-over-quarter respectively.

For buses, strong new energy sales and exports drove high quarter-over-quarter performance growth. Q2 2025 bus industry net profit attributable to shareholders was 1.33 billion yuan, up 12.1% year-over-year and 50.2% quarter-over-quarter. Net profit margin attributable to shareholders was 6.7%, up 0.5 percentage points year-over-year and 0.9 percentage points quarter-over-quarter, with segment profitability improving in both comparisons. Yutong Bus Q2 2025 net profit attributable to shareholders was 1.18 billion yuan, up 16.1% year-over-year and 56.4% quarter-over-quarter. Due to Yutong Bus's large proportion of segment net profit attributable to shareholders, it significantly boosted the segment.

**Investment Recommendations: Focus on Quality Targets Across All Segments**

Trade-in policy subsidies are intensifying, helping boost downstream consumer demand. Recommendations include GEELY AUTO (00175), BYD COMPANY (01211), SAIC Motor (600104.SH), XPeng-W (09868), Li Auto-W (02015), Seres (601127.SH), Changan Automobile (000625.SZ), and Great Wall Motor (601633.SH).

For auto parts, recommendations include Xinquan (603179.SH), Tuopu Group (601689.SH), Luxshare Precision (300679.SZ), BYD Electronic (00285), Xinyi Glass (601799.SH), Bethel (603596.SH), Longsheng Technology (300680.SZ), Huafeng Technology (688629.SH), Lingyun (600480.SH), Huayu Automotive (600741.SH), Desay SV (002920.SZ), and suggest attention to Yinlun (002126.SZ).

Old commercial vehicle scrapping and renewal policies are driving heavy-duty truck domestic demand upward. The bus segment has good competitive dynamics and leading companies' high dividend policies are expected to continue. Recommendations include China National Heavy Duty Truck Group (000951.SZ), Weichai Power (000338.SZ), and Yutong Bus (600066.SH).

**Risk Warnings:** Terminal demand below expectations; raw material price increases pressuring profitability; automotive export growth below expectations.