March vehicle sales increased 1.8% yoy to 293,123 units. Bothpassenger vehicles （"PV"） and commercialvehicles （"CV"） segments showed improvement. PV sales decreased 1.3% yoy, significantly narrowed from steepdecline in January and February. Meanwhile, the CV segment increased 16.0% yoy on strong HDT improvement. HDT sales increased 16.3% yoy, reflecting growth of infrastructure investment. In 1Q19, overall vehicle sales wasdown 10.0% yoy.
Japanese brands lead sales. In March, Dongfeng Honda sales advanced 49.9% yoy due to the low base. In thesame period last year, the Dongfeng Honda CR-V and other 1.5T engines had issues which halted sales for anumber of months. Therefore, we would expect sales growth to remain at a high level in 2Q19. Meanwhile, DongfengNissan recorded sales of 107,658 units, up by 7.4% yoy. Once again, the Sylphy was the major revenue driver for thesedan lineup. The X-Trail and Qashqai remained as popular SUV models as per downstream data, up 10.3% yoy and15.7% yoy, respectively. The new Qashqai will launch this month （April）， and should continue to support salesgrowth.
French and self-owned brands continued the downward trend. Dongfeng Renault and Dongfeng PSA vehiclesales declined by 78.0% yoy and 55.2% yoy, respectively. Meanwhile, Dongfeng Liuqi （PV） and Fengshen was downby 36.1% yoy and 44.2% yoy, respectively.
March sales confirm our conservative view in Dongfeng Group, as too many weak brands are draggingperformance. Model cycles for French brands, both Renault and DF PSA, are rather weak. While contribution of newmodels from self-owned brands are still uncertain. We maintain investment rating is "Reduce", with TP of HK$6.86,representing 4.2x 2019 PER and 3.9x 2020 PER.