China Securities Co., Ltd.: European and American cars need significant improvement, while Chinese brands are expanding into emerging markets.

China Securities Co., Ltd. released a research report stating that the demand in the European market for two-wheeled vehicles has significantly rebounded after the end of the Euro 5+ transition period, with steady growth in emerging markets. Japanese and Indian companies have achieved growth, while European and American brands continue to decline. Brands in different camps have shown differentiation in unit price, per unit profit, and profit margin. In the four-wheeled vehicle sector, North American demand continues to moderately recover, while European demand has noticeably rebounded. Headline brands have shown differentiation in performance, with Arctic Star, Bombardier, and Kawasaki benefiting from low base numbers and inventory optimization to achieve growth, while Yamaha's all-terrain vehicles continue to incur losses and fall behind. Looking ahead for the whole year, overseas motorcycle demand is expected to continue to grow, with Japanese companies guiding for continued growth in the motorcycle business, and Chinese companies are poised to grab market share in the global market. The four-wheeled vehicle market is expected to grow in the medium to long term. Key points from China Securities Co., Ltd. include: Two-wheeled vehicles: both mature and emerging markets are growing, with strong performance from Japanese and Indian companies. In Q1 2026, as the Euro 5+ transition period in Europe ended, registration numbers significantly rebounded (with year-on-year growth in Italy, Germany, France, UK, and the Netherlands at +14.3%, +26.9%, +43.9%, +9.8%, and +15.2%, respectively, with a decrease of -16.6% in Spain). Southeast Asia maintains steady growth (with year-on-year changes in Indonesia, Vietnam, and Thailand at -4.1%, +8.3%, and +2.9% respectively), while India and Latin America continue to show high growth trends (with synchronous growth in India, Pakistan, Brazil, Argentina, and Mexico at +26.4%, +20.6%, +35.9%, +46.5%, and +31.9%, respectively). Japanese and Indian brands have achieved continuous sales and income growth in both their domestic and export markets due to the increasing demand in emerging markets and the seizing of market share in mature markets. High-end markets such as Europe and America are struggling with pressure and intensifying competition, with local brands facing sales pressures. Changes in motorcycle consumption structure and intensified competition in mature markets have led to differentiation in unit price, per unit profit, and profit margin between European, American, Japanese, Indian, and Chinese companies. Four-wheeled vehicles: demand growth in Europe and America, with differentiation in performance among headline brands. Benefiting from the low base effect and previous interest rate cuts stimulating consumption, Q1 saw continued growth in demand in North America, with significant rebound in demand in Europe. Head manufacturers have seen profit margin increases due to the low base effect, with Arctic Star seeing a 14% growth in revenue and an increase in gross profit margin, Bombardier experiencing revenue growth of over 30% and an increase in gross profit margin, Yamaha continues to see declining revenue and significant losses, Kawasaki's all-terrain vehicles have seen increases in both volume and price, leading to a substantial growth in revenue, while special vehicle revenue for Deutz Lorin has seen a double-digit decline, but the profit margin has stabilized and increased. Chinese companies: a new journey in globalization, with continued growth for Chery, Tao Tao, and Linhai. In Q1 2026, Chinese companies actively expanded into overseas markets, seizing global market share. Chery, Tao Tao, and Linhai have seen continuous growth in revenue and profit, with Tao Tao's revenue scale exceeding 1 billion RMB for four consecutive quarters. Meanwhile, Qian Li, Tao Tao, and Greenway have started to expand into the fields of AI, Siasun Robot & Automation, semiconductors, etc. Chinese motorcycle companies, while gradually exploring a second growth curve on the basis of the growth in their main business. Outlook: Japanese companies guide for continued growth in the motorcycle business, while differentiation among the four-wheeled vehicle brand camps. In the two-wheeled vehicle sector, Japanese companies predict that motorcycle volume and sales will continue to grow in the 2026 fiscal year. After two consecutive years of decline, Harley-Davidson is expected to stabilize in 2026. It is expected that global market competition will continue to intensify, and Chinese companies are expected to capture market share in the global market. In the four-wheeled vehicle sector, overall industry demand is recovering, headline brands are optimizing inventory levels, and the outlook for 2026 is optimistic. Second-tier brands such as Kawasaki and Chery are actively expanding, while Yamaha is gradually falling behind. Tao Tao's dual-brand strategy is expected to continue to capture the golf cart market, outperforming industry leaders such as E-Z-GO and Yamaha, and steadily increasing market share. Investment recommendation: The motor sports industry is in a fast-growing lane, with consumer upgrades and increased demand for leisure and entertainment driving the penetration of all-terrain vehicles and medium to large displacement motorcycles. Chinese motorcycle companies have improved product strength in recent years, with obvious cost-performance advantages, making it likely for them to seize market share in overseas markets. Product structure continues to optimize, with market share and profit margins steadily improving. It is recommended to invest in Zhejiang CFMOTO Power, a leading exporter of all-terrain vehicles expanding from high-end recreational vehicles to the mass market, and Zhejiang Taotao Vehicles, a strong brand in golf carts and the new player in humanoid Siasun Robot & Automation. Keep an eye on Chinese motorcycle export companies like Loncin Motor. Risk warning: overseas demand may not meet expectations, risks related to freight and exchange rate fluctuations, risks of trade frictions and tariffs.