July data showed that the automotive industry has declined. Of the six indicators that constitute the automotive industry's boom index, except for the two indicators of auto parts exports and auto employees, the auto industry’s four indicators of fixed asset investment, sales volume, total taxation, and total profit declined to varying degrees.

As of August 25, 31 companies that have listed auto parts companies have issued interim reports. Examining revenue growth indicators, except for the year-on-year negative growth of Xiyi Co., Ltd. and Wanliyang, the rest of the companies achieved growth ranging from 2.09% to 40.04%. The increase in net profit is not optimistic. Nearly one-third of the 10 companies' net profits fell year-on-year, and the decline was in the range of -146.57 times for Xiyi and -5.71% for Jinma.

According to the mid-year report issued by 12 companies including Zhongtong Bus, Lifan Automobile, Yutong Bus and JAC, the majority of companies achieved double growth in revenue and net profit. Among them, the operating revenues of Lifan Motors, Zhongtong Bus and Jiangling Motors, etc. grew at a relatively high rate, increasing by 25.11%, 22.42% and 20.14% respectively year-on-year. Companies with higher net profit growth include Yaxing Bus, Zhongtong Bus, and Shuguang Stock, which were up 3.05 times, 51.12%, and 25.67% over the same period last year. BYD has become the only company with a year-on-year decrease in revenue and net profit. Its revenue decreased by 10.77% year-on-year and its net profit decreased by 88.63%.

The reported turnover of automotive industry enterprises totaled RMB 11.21 billion, an increase of only 4.13% year-on-year to RMB 107.67 billion, and net profit totaled RMB 5.990 billion, a decrease of 27.83% year-on-year. In the first half of the year, the prices of auto raw materials such as rubber, steel, and non-ferrous metals have been operating at a high level and labor costs have risen. However, the bargaining power of spare parts and vehicle manufacturers is not strong enough, and the increased costs cannot be transmitted to downstream industries and end consumers. The cost of tapping and digging up inside itself has squeezed the gross margin of the company. The slowdown in operating income and net profit growth is a reflection of the current industry situation where the auto industry is at a low level.

In the first quarter of 2011, the trend of the industry index was stronger than that of the CSI 300. However, the disparity in performance disclosed in the industry's 1st quarter report triggered market investors' general concerns about the development of the industry in the second quarter and the second half of the year. This concern was quickly reflected in the stock market and spread out. Coupled with the complex economic and international macroeconomic situation at that time, the auto industry index entered the downtrend channel from March 28th, and short-term sentiment overshadowed the industry market. It was not until May 30 that the index stabilized and the industry index has dropped back to August 2010 levels, with a 19.03% decline in two months.

From the second quarter to the end of July, the overall trend of the industry index is highly correlated with the broader market index. A large amount of money was drawn from the entire vehicle and parts industry sector. The net outflow of funds totaled 8.3 billion yuan, of which the total vehicle segment was about 2.6 billion yuan and the parts and components segment was 5.7 billion yuan. New shares such as Camel, Wanan Technology, and BYD have received attention from short-term funds.

In 2011, the industry entered a period of structural adjustment. It is expected that the growth rate of production and sales will be -5% to -8% year-on-year. Without the intervention of policy external factors, the fundamentals are difficult to change rapidly, and the industry index will continue its previous weak pattern. Industries such as Shanghai Auto, Jiangling Motors, Yutong Bus, etc., with steady growth in performance, dividends, and other blue chip stocks have medium and long-term investment opportunities. The reorganization of assets such as FAW Xiali and FAW Cars and the new energy concept stocks such as Ankai Bus and Wanxiang Qianchao have structural Investment Opportunities.