BYD Co. Ltd. (01211.HK) is expected to benefit from Shenzhen’s latest automobile policy that aims to limit the number of new cars in the city while seeking to boost the proportion of non-polluting vehicles.
Under a new policy, Shenzhen will allow only 100,000 new cars to come on to the road each year through 2019.
The new curb could mean that 450,000 cars that would otherwise have come on to the roads could be off the market, cutting growth by 80 percent from the 2014 level.
Yet, 20 percent of the 100,000 annual quotas will be allocated to electric-cars, a rule that is seen boosting the prospects of Shenzhen-based electric-vehicle maker BYD.
Investment banks China International Capital Corp. and BOCOM International Holdings Co. both expect a rise in sales of BYD’s new-energy vehicles, the Hong Kong Economic Journal reported Monday.
The Shenzhen government imposed new car restrictions on Dec. 29, becoming the eighth city in the China to implement such a purchase limit after moves by Shanghai, Beijing, Guiyang, Guangzhou, Shijiazhuang, Tianjin and Hangzhou earlier.
A BYD spokesman was quoted as saying that the municipal government aims to boost new-energy cars on the road while restricting the population of diesel-fueled vehicles. He pointed to generous quotas that Shanghai, Beijing, Guangzhou and Shenzhen had allocated for alternative-fueled cars.
Analysts believe there could be a two-percentage points decline in overall vehicle sales in the country.
BYD, Brilliance China Automotive Holding Ltd. (01114.HK) and Guangzhou Automobile Group Co. Ltd. (02238.HK) currently take 3.8 percent, 4.5 percent and 5.6 percent shares respectively in Shenzhen vehicle sales, according to data from Citigroup.
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