Auto stocks rose across the board, with Leapmotor (HK: 09863) up 6.44% at HK$37.04, Geely Auto (HK: 00175) up 5.02% at HK$15.89, XPeng-W (HK: 09868) up 3.34% at HK$39.62, and Seres (HK: 09927) up 2.84% at HK$34.74.

On the news front, multiple government departments jointly issued a notice. The "Notice on Further Strengthening Management Related to Innovative Design and R&D Test Verification of Automotive Products (Draft for Comment)" requires standardizing the new vehicle development process and sets minimum requirements for the duration and mileage of reliability testing. Shenwan Hongyuan believes this will effectively improve the situation of rapid new vehicle launches and facelift competition. Over the medium to long term, competitive pressure from the supply side is expected to ease, and compliant companies will benefit as a result.

It is worth noting that on October 9, China and the EU reached an understanding on hybrid vehicle trade in a manner consistent with WTO rules. Huatai Securities believes this round of progress temporarily alleviates the risk of escalating auto trade frictions. Drawing on the history of Japan-EU auto trade negotiations, localized production helps mitigate export constraints. We suggest paying attention to the outcome of the European Council summit on October 15-16 regarding the review of the hybrid vehicle proposal.