China passenger vehicle sector:April auto wholesale remaining decent,although not strong

　　Earlier today, China Association of Automobile Manufacturers (CAAM)released April China vehicle wholesale data. In summary, April passengervehicle (PV) sales were 1.8m units, implying a YoY growth rate of 6.5% (-13.5%MoM). By segment, SUV sales stayed strong in April (up by 31.6% YoY andaccounting for 34% of China PV sales) and local brands’ performancebenefited with their SUV sales making up 55% of total SUV sales. For 4M16,China PV wholesale grew by 6.7% YoY to 7.4m units. Regarding the impact ofthe sub-1.6L PVs’ 5ppt partial purchase tax cut, the policy led to 12.1% YoYwholesale growth for that segment to 1.3m units in April, reflecting thecontinuous effectiveness of the policy. In comparison, above-1.6L PVwholesales went down by 5.6% YoY during the same period, on our estimates.

　　In addition, sales of new energy vehicles (NEV) grew 1.9x YoY to 31,772 unitsin April, with pure electric cars increasing 1.7x YoY and plug-in hybrid up64.1%. The slower NEV growth rate vs. 2015 is probably due to uncertainty inlocal government subsidy, in our view.