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2024.07.20

Word count: 1540, reading time: about 3 minutes

Introduction"The price is determined by dealers as independent business entities," said Dai Hexuan.

Author |Wu Ziye, China Business News

Recently, there have been rumors in the industry that the first-tier luxury brands BBA (Mercedes-Benz, BMW and Audi) have withdrawn from the price war. Recently, Dai Hexuan, CEO of BMW Brilliance, told a reporter from China Business News: "Prices are determined by dealers as independent business entities. BMW will maintain intensive discussions with upstream and downstream partners to see how a sustainable business model should be carried out to ensure that all partners can make enough money to survive into the future."

"Some competitors publicly say that their prices are below cost. We will not judge whether this is right or not for now, but at least our business model should be sustainable." Dai Hexuan believes that competition is the driving force for innovation and for providing innovative products to customers, but all competing parties need to abide by certain rules and compete fairly, so that such competition can be sustainable.

He said that defining price itself is complex, involving supply and demand, product connotation, soft value, hard value, emotional value, etc. But a key factor is that the company cannot make a loss for a long time, otherwise the company will not survive and the after-sales service provided for the product will not be sustainable.

Since the beginning of this year, the price war in the auto industry has spread to the luxury car sector. In the past few months, the terminal prices of many BBA products have dropped significantly, which has caused many stores operating luxury brands to suffer losses. Shen Jinjun, president of the China Automobile Dealers Association, said at the 16th China Automobile Blue Book Forum in June this year that luxury brand dealers have begun to suffer large-scale losses.

Price reduction strategies have not effectively stimulated sales growth. Official data show that in the first half of this year, the sales of Mercedes-Benz and BMW still showed a downward trend. BMW China said that in the second half of the year, BMW will focus on business quality in the Chinese market and support dealers to make steady progress. In an interview with reporters, many BMW dealers in the East China region said that BMW China and BMW Brilliance cancelled the sales target assessment for dealers in the East region from the third quarter. As a result, BMW dealers' inventory pressure was reduced and they reduced their terminal price promotion efforts. As of now, the average price of a single vehicle has increased by about 13,000 yuan.

At present, the entire luxury car market is facing the challenges of declining sales and electrification transformation. In particular, the brand premium of luxury brands in the past few years has been difficult to transmit to electric vehicle products, and the terminal prices of electric vehicles currently launched by BBA have all dropped sharply. The next generation of models built on the new platform is the key to BBA's market competitiveness in the era of electrification. According to the plan, BMW's new generation of models will be launched in the global market in 2025, and at least 6 models will be put into production in the next two years. The new car will be equipped with a new electronic and electrical architecture, a new user interface and human-computer interaction concept, and a new high-performance electric drive battery system.

It is worth noting that in the current competition in the new energy vehicle market, production efficiency is very important. Among them, the integrated die-casting process is a key factor in improving automobile production efficiency. Compared with the "stamping + welding" process used in traditional body manufacturing, the use of integrated die-casting technology to manufacture aluminum alloy bodies can significantly reduce the weight and number of parts of the car.

"Regarding the large-scale die-casting process, the technical level involves whether a single material can be used for large parts of the car body. When designing a car, we face many conflicting design requirements, such as the balance between vehicle weight, safety, strength and toughness. High strength can keep the physical structure of the car body unchanged during a collision, while toughness improves the energy absorption level and protects the safety of the occupants in the car. Different factors need to be weighed. Therefore, we hope to combine different materials to achieve a material selection that is both soft and hard, which can absorb energy and protect occupants. When using a single material, you have to compromise between energy absorption and occupant protection. We will continue to use multiple materials until we find a single material that can achieve our design goals, so we will not use the large-scale die-casting process at this time." Dai Hexuan told reporters.

Dai Hexuan believes that to measure the efficiency of a factory, we should not only look at the number of employees and input level of the factory. The efficiency of the production system should not only focus on the initial cost, but also take into account flexibility and quality costs.

He said that the biggest cost challenges in industrial manufacturing are two-fold: one is the lack of flexibility, which may result in only being able to produce one product that meets market demand; the other is poor quality, which leads to returns or recalls, with costs far exceeding production costs.

"If you do something unsustainable today, you will have to pay for it tomorrow." Dai Hexuan said that the core logic of BMW's production strategy is sustainability, digitalization and lean production. In addition to financial costs, it also focuses on flexibility, quality and sustainability to improve the efficiency of the production system. In addition, short-term and long-term issues of cost-effectiveness must also be considered.

WeChat Editor| Su Xiao