According to statistics from the China Passenger Car Association (CPCA), retail sales, wholesale deliveries, and production of passenger vehicles in October reached 2.242 million, 2.932 million, and 2.951 million units, respectively, representing year-on-year changes of -0.8%, +7.6%, and +11.4%. Exports (including complete vehicles and CKD units) totaled 568,000 units, up 27.7% YoY and 7.5% MoM.

Retail sales saw a slight YoY decline and flat MoM performance, primarily due to tightened subsidy policies for vehicle trade-ins in certain regions, leading to divergent sales growth across markets. Wholesale growth outpaced production and retail, reflecting an industry-wide inventory reduction trend. Total inventory at manufacturers and dealerships fell by approximately 19,000 units MoM, with NEV inventory declining more significantly.

Exports remained robust, rising 27.7% YoY and 7.5% MoM, driven by NEV exports, which surged 104.2% YoY and 18.6% MoM to 251,000 units, accounting for 44.2% of total exports—a 17-percentage-point YoY increase.

**NEV Penetration Rises Steadily, New Energy Brands Sustain Strong Growth** NEV wholesale sales climbed 18.5% YoY and 8.5% MoM to 1.621 million units, with penetration rising 5.1ppt YoY and 1.9ppt MoM to 55.3%. By segment, battery electric vehicles (BEVs), plug-in hybrids (PHEVs), and extended-range EVs accounted for 62.9%, 29.6%, and 7.5%, respectively. Among brands, BYD led with 437,000 wholesale units. Emerging automakers also performed strongly: LEAPMOTOR sales jumped 84% YoY to 70,000 units, XPeng grew 76% YoY to 42,000 units, and Xiaomi delivered over 40,000 units.

**Domestic Demand Faces Challenges; Global Restructuring Opportunities Emerge** While domestic sales have surpassed 2017 peaks, sustaining growth resilience through 2026 remains uncertain. Continued central and local subsidies could stabilize demand. NEV adoption is expected to maintain double-digit growth, supported by supply-side innovations and model upgrades, though potential policy tapering by late 2025 may cause short-term volatility.

**Investment Recommendations** Focus on commercial vehicle sector opportunities and leading auto parts firms with global advantages: 1) **Commercial Vehicles**: SINOTRUK (03808), Yutong Bus (600066), CIMC Vehicles (301039). 2) **Auto Parts**: MINTH GROUP (00425), Fuyao Glass (600660), Bethel (603596). 3) **Robotics**: Sanhua Intelligent (002050), Tuopu Group (601689), Zhejiang Rongtai (603119). 4) **OEMs**: GEELY AUTO (00175), LEAPMOTOR (09863).

**Risks**: Policy subsidy shortfalls, slower overseas expansion, and delays in emerging industry development.