Investment analysts are rallying around some potential winners in China's car market after a 10-day car show in Beijing put the fierce competition on full display. The opening morning of China's biggest car show of the year – April 25 in this case – is typically a mad rush. But this time, the sheer number of people and car launches often made movement between stands slow. I noticed that the second day was not much better, unlike a run-off in previous years. “The attendance this year was nothing short of overwhelming,” Nick Lai, head of China equity research and Asia Pacific autos research at JPMorgan, said in a report in late April, noting a rise in the number of livestreamers and foreign dealers attending the show. 'We notice that this year[d] a significant number of foreign visitors who are the foreign dealers or importers of Chinese brands,” JPMorgan analysts said. They expect overseas markets to contribute about a quarter of leading manufacturer BYD's auto profits this year. Tesla, which gets more than a fifth of its sales from China, has not exhibited at the main auto show since protesters disrupted its stand in 2021. But most recently, CEO Elon Musk made a surprise visit to Beijing last weekend, where the company overcame a data security hurdle for local car sales. and moved closer to approval of the driver assistance software for use in China. “Despite the Chinese car market being about 50% larger than the European one, there are about 170 brands active on the market, compared to 80 in Europe, which clearly points to an oversaturation of the market. the market with poor economies of scale, with about 150,000 cars sold per brand, compared to ~200,000 in the EU,” European auto analysts at JPMorgan said in a separate report last month. “This creates irrational competition at a time of transition,” The report says, “which begs the question whether international OEMs, including Premium, will have to compete in the entry-level or compact segment respectively over the next five years.” Open to the public After two days of restricting access exclusively to business and media, the Beijing auto show opened to the general public. Car companies then competed to attract consumers – apart from offering coffee and prizes, Porsche and Geely-backed Zeekr both showed off Apple Vision Pro experiences. The device is not yet available in China. Brands from Japanese carmaker Mazda to Chinese EV start-up Nezha hired musicians and dancers to perform, along with a short fashion show around the cars. Often the organizers would remove the barriers a few seconds before the show ended, allowing the audience to run to the cars and performers. Autonomous driving supplier Asensing attended the auto show to learn about the latest industry trends, while showcasing its proprietary sensors and chips in a bid to support a global expansion, said senior brand and public relations director Zhang Haizhou, noting that “most people's next car is going to be much smarter.” According to organizers, more than 110 new car models debuted at the Beijing Auto Show. “Car shows have become a marketing tool for top brands to gain traction, not only through their products, but also through their vocal management,” auto analysts at Morgan Stanley Asia Pacific said in a report last week. “The founders of EV manufacturers, especially brands like Xiaomi and BYD, stole the show,” they said. Xiaomi founder Lei Jun was rumored to be walking through the exhibition center after giving a speech on the morning of April 25 to promote his company's new SU7 electric sedan. “Xiaomi was one of the surprise highlights, with the most hits on social media for SU7 and its chairman Lei Jun,” Jefferies auto stock analysts said in a May 1 report. “We've learned that marketing matters and that's rich [Xiaomi’s] DNA as the consumer electronics juggernaut.” The smartphone and home appliance company said it delivered 7,058 units of the SU7 in April, when deliveries began. Nio and Zhejiang-based Leapmotor reported better-than-expected deliveries in April, according to Bank of America Merrill Lynch analysts are up more than 50% since the mid-April lows “We believe orders will improve [month-over-month] in May, thanks [a] The stimulus policy was announced on April 26,” the BofA analysts said in a separate report. Trade-in policy As part of China's effort this year to encourage trade, the Commerce Ministry said that through the end of this year, certain purchases of New Energy vehicles and some fuel-powered cars could be eligible for subsidies of about $1,000 or more. Jefferies' analysts estimate the policy could boost China's passenger car sales by 1 million units this year, split evenly between electric and gasoline models. The new forecast implies new energy vehicle penetration of 45%, up from 44% previously, the report said . The analysts highlighted their picks for Chinese auto stocks such as Leapmotor, Geely and BYD, all priced to buy and listed in Hong Kong. Leapmotor had the biggest upside against Jefferies' price target – implying a potential gain of 20%. JPMorgan's top picks also include BYD and Leapmotor, which sees them as potential beneficiaries of government stimulus measures. positive market sentiment in the long term.” The focus on Chinese automakers indicates that foreign companies are losing out. “During an investor day in Beijing ahead of the Auto Show, [ Volkswagen ] “Management provided an honest assessment of how VW, along with most foreign OEMs, misjudged the change in consumer demand and missed the emergence of a cost-competitive domestic Chinese industry that better reflects consumer trends,” the Jefferies report said. leadership, VW aims to maintain its No. 1 position among foreign OEMs.” Jefferies also has Buy ratings for Volkswagen and its local electric car partner Xpeng, but rates only Tesla and Toyota Motor as Hold. – CNBC's Michael Bloom contributed to this report.