Car stocks have been on a steady upward trend, with the Ankai Bus experiencing a strong two-day streak on the daily limit board after announcing its plan to acquire a 41% stake in Jianghuai Buses through a private placement. As the automotive industry continues to integrate and demand for vehicles grows, many industry insiders believe that auto stock performance will maintain robust growth, making this sector a solid long-term investment. In the first half of the year, sales of passenger cars, commercial vehicles, and heavy trucks all showed strong momentum, with increases exceeding 20%. Passenger and commercial vehicle sales even reached 98%, indicating a very healthy market. Analysts expect that auto stocks will significantly outperform market expectations due to this rapid growth. Looking at the semi-annual reports, companies like Haima, Yutong Bus, and Dima have all delivered impressive results. Their growth is primarily driven by core business expansion. Additionally, several auto stocks are forecasting bright performances, such as Shanghai Auto, which is expected to see over 300% growth, Changfeng Auto and China National Heavy Duty Truck with more than 100% growth, and Ankai Bus expecting a 50%-80% increase. Overall, the net profit growth of auto stocks in the first half of the year has already exceeded expectations. In the second half of the year, July data shows that passenger vehicle production increased by 26.7%, while sales rose by 33% year-on-year. It's anticipated that consumer demand will remain strong, further boosting annual profits for auto stocks and supporting continued growth. Industry integration is also gaining momentum. After the Shanghai Automotive Group's full listing, the pace of consolidation has accelerated. Major shareholders are eager to expand, creating a major trend in the coming years. For example, SAIC Motor has partnered with NAC, Foton Motor has formed an alliance with Dai-ke Company, and FAW Car and FAW Xiali are also exploring potential integrations. Successful mergers could significantly enhance company performance. Haima’s semi-annual report showed a 612.6% increase in performance, mainly due to the completion of a targeted share issue last year, the acquisition of 50% equity in FAW Haima, and 100% ownership of Shanghai Haima. This performance boost has led to a sharp rise in Haima’s stock price, with a cumulative increase of over 68% since late July. Ankai Bus recently announced plans to acquire 41% of Jianghuai Bus by issuing 10 million additional shares to the group. If completed, this move will strengthen Ankai’s product lineup in the mid-to-low-end bus segment and elevate its industry position, likely driving up its stock price. From a valuation perspective, the P/E ratio of mature foreign auto industries is typically around 10 times, but China’s auto stocks currently carry higher valuations. For instance, Shanghai Automotive is expected to achieve a EPS of 0.8 yuan this year, resulting in a dynamic P/E ratio of about 30 times. Even if EPS reaches 1 yuan, the P/E would still be around 25 times. Similarly, Changan Automobile, with an expected EPS of 0.65 yuan, has a P/E ratio of 27 times. However, analysts argue that the foreign auto industry is in a declining phase, while China’s auto market is just beginning to take off. With continued consumption upgrades and growing demand, the Chinese auto industry is in a period of rapid growth and consolidation. Given this context, Chinese auto stocks should warrant a higher P/E ratio compared to their foreign counterparts. The current valuation level is still reasonable, and there is room for optimism in the long term.

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