China Galaxy Securities: Rationally view the decline of national subsidies for home appliances, the retail market for clean appliances is still expected to maintain growth
China Galaxy Securities released a research report stating that although the reduction of national subsidies has led to a short-term decline in the retail of major appliances, the penetration rate of clean appliances continues to rise, and it is expected that the retail market will still maintain growth by 2026. Since September, major appliances have generally declined year-on-year, and in October, the retail of clean appliances saw a significant drop, but there is still notable growth compared to the same period in 2023. The industry holds a cautious attitude towards future replacement demand, and the impact of subsidy overdrafts affects short-term performance
According to the Zhitong Finance APP, China Galaxy Securities released a research report stating that current AVC retail monitoring shows a general year-on-year decline in major appliances since September, with a significant drop in retail sales of cleaning appliances since October. However, compared to the same period in 2023, there is still substantial growth. The industry had anticipated this, for example, data from the Industrial Online shows that the domestic production of air conditioners for October, November, and December is down -11.5%/-8.4%/-9.9% compared to the same period last year, reflecting a cautious attitude in the industry. It is expected that the main demand will be for the replacement of major appliances, with the impact of subsidy overdrafts being short-term; the penetration rate of cleaning appliances continues to rise, and the retail market is still expected to maintain growth in 2026.
The main points from China Galaxy Securities are as follows:
National subsidies decline, how to view the high year-on-year base of home appliances
According to data from the National Bureau of Statistics, the year-on-year growth of social retail in September was +3.0%, with a month-on-month decrease of -0.34 percentage points, continuing to slow down since June; among them, the year-on-year growth of household appliances and audio-visual equipment in September was +3.3%. Looking back at the national subsidies for 2024, the year-on-year growth for household appliances and audio-visual equipment retail in September, October, November, and December 2024 is expected to be +20.5%/+39.2%/+22.2%/+39.3%, with major appliances gaining momentum in September. Cleaning appliances do not belong to the eight major categories and only began to enjoy subsidies at the end of September, with a strong outbreak starting in October. The year-on-year online retail sales for September, October, November, and December 2024 are expected to be +23.7%/+129.6%/+38.3%/+103.3%, with the initial weeks being significantly influenced by previous orders, resulting in multiple growth.
Current AVC retail monitoring shows a general year-on-year decline in major appliances since September, with a significant drop in retail sales of cleaning appliances since October. However, compared to the same period in 2023, there is still substantial growth. The industry had anticipated this, for example, data from the Industrial Online shows that the domestic production of air conditioners for October, November, and December is down -11.5%/-8.4%/-9.9% compared to the same period last year, reflecting a cautious attitude in the industry. It is expected that the main demand will be for the replacement of major appliances, with the impact of subsidy overdrafts being short-term; the penetration rate of cleaning appliances continues to rise, and the retail market is still expected to maintain growth in 2026.
The market competition is exciting, especially in the technology consumer market
On September 19, Xiaomi upgraded its air conditioner warranty from "6 years of free repair" to "10 years of free repair," covering air conditioners installed for the first time from January 1, 2025. Currently, Xiaomi's air conditioner retail market share remains stable and has not declined due to negative public sentiment surrounding Xiaomi's automotive ventures; the 10-year warranty policy has played a role in offsetting the negative sentiment.
The smart lawn mower market is viewed positively, with many companies actively entering the market, making it lively but highly competitive. At the IFA in September 2025, Roborock released its lawn mower product, marking the entry of all three major robotic vacuum cleaner leaders into this market.
In the action camera market, DJI is on the offensive, with significant price reductions for action cameras, drones, and other products, while continuously launching new products. This is expected to be DJI's response to the entry of Yingshi into the drone market.
UGREEN Technology benefits from a wave of updates caused by safety incidents with power banks, with operating income in Q3 2025 reaching 2.51 billion yuan, a year-on-year increase of +60.4% Export market capacity continues to relocate, heat pump exports recovery is a highlight
On October 10, U.S. President Trump announced that starting November 1, an additional 100% tariff will be imposed on all imported goods from China. Due to the significant pressure from tariff increases since April, leading consumer companies have generally been psychologically prepared and are accelerating their global capacity layout. For example, on September 16, Midea's air conditioning factory in Thailand was recognized as a "Lighthouse Factory" by the World Economic Forum, becoming the first overseas "Lighthouse Factory" in China's home appliance industry.
According to data from the Industry Online, starting in the second half of 2024, the export cycle of heat pumps to Europe and the United States is gradually moving out, reversing the trend of continuous significant decline. Due to a low year-on-year base, heat pump exports are expected to grow by 22.5% year-on-year from January to August 2025. Looking ahead, recent increases in sanctions against Russian natural gas by European and American countries, combined with a higher probability of a cold winter caused by La Niña in the Northern Hemisphere, indicate that the heating season in Europe is approaching. It is expected that with the resumption of subsidies in some European countries, heat pump exports are likely to continue to improve.
Target Aspects
Investment suggestion: The current market is active, traditional home appliance leaders lack imaginative space and are relatively stagnant, while technology consumer-related companies have better growth. Recommended technology consumer stocks include Roborock (688169.SH), ECOVACS (603486.SH), and Ugreen Technology (301606.SZ); for black electrical appliances, TCL Electronics (01070) and Hisense Visual (600060.SH); recommended are Midea Group (000333.SZ) and Haier Smart Home (600690.SH) for their low valuation, high dividend yield, and successful digital transformation of offline channels; also recommended are Sanhua Intelligent Control (002050.SZ), DUN'AN ENVIRONMENT (002011.SZ), and Deyang Co., Ltd. (605117.SH) for their cross-industry capabilities in the supply chain.
Risk Warning
Risks of policy effects falling short of expectations; risks of U.S. tariffs; risks of intensified market competition
