The rise of domestically branded vehicles is shaking up the automotive industry chain, presenting opportunities for the parts and components sector.

The stock price has surged by 300% over the past year, as Geely races toward a market capitalization of HK$100 billion—currently standing at HK$99.9 billion. Yesterday, Geely Automobile’s intraday high reached HK$11.24, bringing its market cap close to the HK$100-billion mark. This stock price has already soared by more than 300% compared to its “starting price” in mid-February last year. Behind this dramatic stock rally is the accelerating rise of domestically branded passenger vehicles, with Geely serving as a prime example.

In January of this year, despite a slight year-on-year decline in sales in the domestic passenger car market, Geely Automobile saw its sales increase by more than 70% year-on-year. Similarly, the sales growth rates of independent brands under SAIC and GAC both hovered around 60%. Commenting on this trend, an executive from a Chinese-owned automaker pointed out that compared to imported and joint-venture brands, Chinese brands better understand domestic consumers and can respond more swiftly to market changes, having now entered a stage where “value for money” (quality-to-price ratio) is the key to success. As Chinese brands continue to grow, the competitive landscape of the entire automotive industry chain is also undergoing transformation, providing greater growth opportunities for component manufacturers—such as those producing engines and dashboards.

Domestic brands boost production against the trend in the new year.

In January of this year, despite a slowdown in the growth rate of the domestic auto market, several leading Chinese brands still posted strong sales growth. Geely Auto’s January sales reached approximately 102,653 vehicles, representing a year-on-year increase of about 71%. GAC Passenger Cars, the independent-brand platform under GAC Group, sold 46,273 vehicles in January, up 58.66% from the same period last year. SAIC Passenger Vehicles reported monthly sales of 46,268 vehicles, a year-on-year increase of 71.02%. By comparison, according to the latest data from the China Association of Automobile Manufacturers, domestic auto sales in January totaled 2.52 million vehicles, marking a slight year-on-year increase of 0.2%. Among these, passenger car sales amounted to 2.218 million vehicles, down slightly by 1.1% year-on-year.

Although the domestic Chinese auto brands’ remarkable rise has only recently drawn widespread attention from the outside world, in fact, as early as 2016, these brands had already entered a “fast lane.” Phenomena once seen exclusively in the luxury imported-car segment—such as blockbuster models and severe supply shortages—have now begun to emerge among China’s own-brand automakers. For instance, SAIC’s own-brand passenger car, the Roewe RX5, and Geely’s Borui have both been labeled “internet sensation cars.” As a result, Chinese automakers have successively turned their fortunes around and are planning to continue their aggressive growth momentum in 2017.

Lin Jie, Vice President of Geely Auto Group and General Manager of the Sales Company, told a reporter from the Shanghai Securities Journal: “This year, Geely Auto aims to join the club of automakers with annual sales of one million vehicles, planning to sell 1 million units for the entire year—a growth rate of over 30%.” In 2016, Geely’s cumulative annual sales exceeded 760,000 units, representing a growth rate of 50% and surpassing its twice-revised annual sales target of 700,000 units. According to Geely Auto’s earlier announcement, its net profit in 2016 is expected to increase by more than 100%. In 2015, Geely Auto’s net profit was 2.26 billion yuan.

Similarly, an executive from GAC Passenger Cars told reporters that the company will launch nine new models in 2017 and aim to achieve annual production and sales of 500,000 vehicles. In 2016, GAC Passenger Cars’ cumulative sales reached 370,000 units, representing a substantial increase of 90.66%. The reporter learned that, starting from 2016, GAC Passenger Cars’ contribution to GAC Group’s overall performance has surpassed that of its joint-venture partners, such as GAC Toyota and GAC Honda.

As another industry leader, SAIC Passenger Vehicles also achieved its first-ever profit since its establishment in 2016. According to exclusive information obtained by our reporter, in 2017, SAIC Passenger Vehicles set a sales target of “guaranteeing 500,000 units and aiming for 600,000 units.” At the beginning of 2016, SAIC Passenger Vehicles had originally planned a sales target of 240,000 units; however, actual sales significantly exceeded this target, reaching a total of 320,000 units for the year.

Regarding this year’s somewhat “aggressive” targets, outsiders are concerned that SAIC Passenger Vehicles may fall short of its expectations amid the broader backdrop of a slowing growth rate in the domestic auto market. However, Yu Jingmin, Deputy General Manager of SAIC Passenger Vehicles, remains highly confident: “The Chinese automotive market has entered a period of stable growth. If we want to achieve high growth, we must identify and seize new growth markets—this is precisely SAIC Passenger Vehicles’ secret formula. In the second half of last year, SAIC Passenger Vehicles launched a new product category—the internet-connected car Roewe RX5—and successfully captured the attention of young consumers.” Reportedly, in 2017, SAIC Passenger Vehicles aims to replicate the success of the Roewe RX5 with the MG brand. Yesterday, the MG ZS began pre-sales, promoting itself with the slogan: “The first internet-connected SUV that has become the standard choice for young people.”

Yu Jingmin stated: “Following the tremendous success of the Roewe RX5 in 2016, Roewe’s annual sales surged from 100,000 units in 2015 to 240,000 units.” According to internal plans, the MG brand aims to sell 200,000 vehicles in 2017, representing a growth of 2.4 to 2.5 times compared to its 2016 sales volume of approximately 80,000 units. In addition, SAIC Passenger Vehicles plans to seize the opportunities presented by the new-energy vehicle market this year, with a target sales volume of between 80,000 and 100,000 new-energy vehicles.