In "The Big Banks," Citigroup expects mainland China's automobile sales to decline by 4% this year, while remaining optimistic about BYD's overseas business stability

The report from Citi Research indicates that the growth of China's electric vehicle market last year was mainly driven by government subsidies and the intensive launch of new models, but it is expected that the effects of these factors may weaken this year. The analysis shows that approximately 3 to 4 million vehicles' purchasing demand was brought forward in the past two years. Therefore, it is anticipated that domestic automobile sales will decline by 4% this year, marking the first contraction since 2019.

Despite facing challenges in the domestic market, Chinese electric vehicles are gaining significant momentum in the international market and maintaining high profit margins, indicating that the challenges in the domestic market have been fully reflected in stock prices, while external markets offer more upside potential. Overall, the firm expects total passenger vehicle and electric vehicle sales to reach 29.6 million and 18.6 million units, respectively, by 2026, based on an electric vehicle penetration rate of 62.8%.

In terms of stocks, the firm remains optimistic about BYD (01211.HK), as its product and technology cycle is back on track and it has established a solid business foundation in overseas markets; it maintains a "highly confident to outperform the market" rating with a target price of 130 yuan