Everbright Securities: All-terrain vehicle volume and price both rise, maintaining steady growth; optimistic about overseas companies like CFMOTO, etc

According to the Zhitong Finance APP, Everbright Securities released a research report stating that the global all-terrain vehicle industry has entered a period of steady growth. In the future, with economic development and product structure upgrades, the industry will maintain steady growth through an increase in both volume and price. North America is the main consumption area, and the firm is optimistic about domestic vehicle manufacturers with first-mover advantages, deep cultivation in North America, and overseas production capacity, such as CFMOTO (603129.SH), Ninebot Company-WD (689009.SH), and Taotao Vehicle (301345.SZ), which are expected to achieve an increase in global market share and continuous product structure upgrades. The main points of Everbright Securities are as follows: Global market shows stable growth in volume and price, with North America as the core growth area In 2023, the global sales of all-terrain vehicles reached USD 15 billion, and it is expected to increase to USD 29.5 billion by 2033 (10-year CAGR of 7%). 1) From the perspective of volume: global sales of all-terrain vehicles in 2023 are 960,000 units (with ATVs/UTVs accounting for 340,000/620,000 units respectively), and the sales growth rate is highly correlated with North America's GDP growth rate (in 2023, North America accounted for 84% of global sales); future sales are expected to maintain steady growth; 2) From the perspective of price: the optional consumer goods attribute of all-terrain vehicles is evident, and the dual logic of product structure upgrades and minor modifications outpacing inflation has become the main driving factor for the continuous increase in industry average prices. Leading global manufacturers from the U.S. and Japan, while domestic companies are beginning to shine with supply chain advantages The firm estimates that in 2023, major manufacturers from the U.S. and Japan will collectively occupy over 80% of global production capacity. Domestic manufacturers are exporting to Europe and the U.S. with manufacturing and cost advantages, gradually increasing their global market share, with products of equivalent performance priced at only 50%-70% of North American leader Polaris. CFMOTO, as the "leader" in going overseas, has achieved the highest market share in Europe after ten years of accumulation. During the pandemic, which caused supply chain disruptions in Europe and the U.S., it accelerated its entry into these markets with an excellent supply system and products, achieving a global sales share of 15% in 2023, gradually narrowing the gap with global leaders. Domestic companies are deeply cultivating the North American market, building long-term competitive barriers The business attributes of all-terrain vehicles are similar to those of motorcycles and cars, requiring companies to participate in competition with a consumer goods logic. Taking CFMOTO as an example: 1) Products: By increasing product coverage (the number of models on sale increases year by year, with 21 SKUs available in January 2025) and upgrading product structure, it taps into segmented market demands and drives the overall average price of products upward; 2) Channels: Continuously expanding the channel network (with 585 dealers in the U.S. in 2023) and reforming the supply system to connect the front and back ends, improving production, inventory, and terminal sales efficiency; 3) Brand: Integrating into American Powersport culture through marketing investments, club participation, event sponsorships, and celebrity endorsements, while improving the after-sales system to enhance market brand influence; 4) Organization: U.S. and Chinese companies are more focused on the all-terrain vehicle segment compared to comprehensive groups like Honda, allowing them to concentrate resources in the all-terrain vehicle industry, respond quickly to demand, and gain competitive advantages through early product layout. Looking ahead, there is significant room for domestic companies to increase their market share Layout of overseas production capacity weakens external risk factors, beneficial for the improvement of valuation center Affected by the previous increase in tariffs and soaring shipping costs, the profit center of domestic enterprises has fluctuated significantly in recent years. Currently, the United States still imposes a 25% tariff on all-terrain vehicles from China, while shipping costs have returned to a reasonable range. As domestic companies such as CFMOTO and Taotao Vehicle actively layout overseas production capacity, tariff risks are gradually becoming controllable, which is expected to further enhance the industry's long-term profitability and valuation center. Risk Analysis: Terminal demand declines beyond expectations, market competition intensifies beyond expectations, tariffs and shipping costs exceed expectations