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BMW's discounts are tightening, but it won't be easy to get out of the "price war".

Text丨Zeng Xing

Editor: Gong Fangyi

After the topic about BMW China's intention to withdraw from the price war topped the trending searches last week, BMW China said on July 12 that "BMW will focus on business quality in the Chinese market in the second half of the year and support dealers to make steady progress."

Now, a salesperson at a BMW 4S store in Chaoyang District, Beijing said, "The prices of all models have increased, starting this week."

It is not ruled out that the salesperson said this to attract people to negotiate offline, but at the same time, several Beijing dealers said that BMW has started to recover terminal (i.e. 4S store) discounts from this week, and the price increases for different models and configurations vary.

The current price of the BMW i3 35L pure electric car is 200,000 yuan, and the price of the BMW 530 Li leading model is about 376,000 yuan, both of which are about 10,000 yuan more expensive than last month. A salesperson at a store in Haidian District said, "The price increase is not completed all at once. It will increase a little this week, and a little more next week, and then increase slowly."

In the Dongchedi community, car owners from Chengdu, Suzhou and other places also shared their experiences of 4S stores raising their prices in the past month. BMW has clearly withdrawn from the price war, and Audi and Mercedes-Benz are also quietly tightening their prices. A salesperson at Shanghai BMW Zhonghuan said that since July, the terminal discounts of luxury brands have been tightened one after another, "but BMW has said it publicly."

Audi dealers in Chaoyang and Fangshan, Beijing, confirmed that Audi has implemented a new pricing policy since July 5. The landing price of Audi A6L 45TFSI four-wheel drive is about 380,000 yuan, which is about 10,000 yuan more expensive than the terminal price last month. "Our price increase is lower than BMW, only one percentage point (based on the suggested price), and the price will go up slowly."

A sales representative at a Mercedes-Benz store in Chaoyang said: "There has been no price increase yet, but we have received a notice that prices will be raised in the future, but the specific time and increase have not yet been announced." Currently, the Mercedes-Benz sedan model with the largest discount is the C 260 L, with a landing price of about 290,000 yuan, about 65,000 yuan lower than the suggested price. The price of the Mercedes-Benz E 300L luxury model is relatively stable, with a landing price equivalent to the suggested price, about 520,000 yuan.

When sacrificing brand value does not increase sales, exiting the price war becomes inevitable. In the first half of the year, BMW and Mercedes-Benz's retail sales in China decreased by 5.3% and 10.1% year-on-year respectively. Among them, the sales of BMW 5 Series fell by 40% in the first five months of this year due to factors such as generation change, while the 3 Series achieved growth; during the same period, the Mercedes-Benz E-Class increased, while the C-Class fell by nearly 30%.

Following the "BBA" to withdraw from the price war, Porsche should be the next luxury brand. At the beginning of this year, Yongda Automobile mentioned in its annual report that its agent Porsche had proactively reduced its sales plan. However, dealers are still under great pressure. In May, Porsche dealers collectively protested against the pressure on inventory. Under pressure, Porsche China issued a statement on May 27, saying that it would work with dealers to seek "effective ways" to actively respond to market changes and find new opportunities in challenges. A month later, the topic of "Porsche price cuts" became a hot search.

At that time, Porsche dealers in South China said that models such as the fuel SUV Macan and the pure electric sports car Taycan 4 were discounted by up to 30%. Among them, the dealer quoted a price of 629,000 yuan for the Taycan, which was about 270,000 yuan lower than the suggested price. In addition, some Porsche stores also had large coupons such as 99,999 yuan and 88,888 yuan, and offered discounts in the form of bundled installment loans.

Despite a higher discount rate than in most previous years, Porsche sold 26,650 vehicles in China in the first half of this year, down nearly 40% year-on-year. Taycan is the main drag. The new car price war also affected Porsche's second-hand value retention rate. According to the latest data released by the China Automobile Dealers Association, Porsche's value retention rate in June was 74.5%, down 2 percentage points from the previous month. As one of the most value-retaining luxury brands, Porsche's value retention rate exceeded 80% last year.

Just as increasing production capacity will not happen overnight, it is not easy for brands to extricate themselves from "price wars".

This year marks the 30th anniversary of BMW's entry into China. Unlike the asset-light model of leasing production lines when BMW Brilliance was first established, BMW has invested 105 billion yuan in China since 2010, and Shenyang has become BMW's largest production base in the world. BMW Group Chairman Zipse once said, "China is BMW's second home. Without China, BMW's development strategy will not be realized." Last year, BMW delivered more than 820,000 vehicles in China, accounting for 30% of its total sales.

There are more projects on the way. In April this year, BMW invested 20 billion yuan to upgrade the Shenyang Dadong plant of BMW Brilliance, doubling its production capacity after the expansion. In order to achieve the goal of putting into production the new generation of pure electric BMW models in Shenyang from 2026, the supporting BMW sixth-generation power battery project has been fully started, with a total investment of 10 billion yuan and a planned area of ​​240,000 square meters, which is 5 times the existing power battery production area.

Title image source: Visual China