Huatai Securities has unveiled its 2026 outlook for the automotive sector, highlighting the following key trends:

① The overall passenger vehicle market is projected to maintain stability, with domestic brands increasingly targeting the premium segment through large five- and six-seater SUVs. Meanwhile, new energy vehicle (NEV) models are accelerating their expansion into Western Europe. Investors are advised to focus on automakers demonstrating exceptional performance in both premium and export markets.

② Within the automotive components sector, two primary themes dominate: "globalization" and "emerging sectors." For globalization efforts, the European market should be prioritized, with investment strategies centered on securing orders and expanding production capacity. In emerging sectors, robotics and AI-driven liquid cooling technologies represent critical growth areas. For robotics, staying abreast of technological advancements and commercialization milestones is crucial. Liquid cooling technology, which shares foundational synergies with automotive engineering, is poised for significant performance and valuation gains.

③ Intelligent driving is emerging as a core application for AI, with rapid integration of AI technologies in vehicles. The city Navigation on Autopilot (NOA) feature is now extending from models priced at ¥200,000 to those in the ¥150,000 range. L4 autonomous driving is on track for broader commercialization. Investors should monitor leading operating platforms and high-growth component suppliers in this space.